Crypto Platforms That Don’t Register With The SEC Do Business “Outside the Law”: Gensler

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The rise of cryptocurrencies has raised questions about when the Securities and Exchange Commission will unveil regulations specifically targeting cryptocurrencies. SEC President Gary Gensler says the relationship between the regulator and the cryptocurrency industry is actually simple.

In a new Influencer interview with Andy Serwer, the influential SEC chairman explained why he considers existing law “simple” when it comes to exerting broad influence on issues from a potential Bitcoin spot ETF to regulating cryptocurrency platforms in wider way.

Gensler is currently urging the largest cryptocurrency exchanges, such as Coinbase (COIN), BlockFi and others, to voluntarily register with the SEC. But he says “the law is clear” on this issue. “It’s a question of whether they are registered or whether they are operating outside the law and I’ll leave it to that,” he told her.

Gary Gensler, chair of the Securities and Exchange Commission, during a Senate hearing in 2021. (REUTERS / Evelyn Hockstein / Pool)

Gensler also pointed to the recently settled case against BlockFi for $ 100 million in its cryptocurrency interest account as an example of why these companies “must comply with time-tested securities laws.”

This week’s comment comes as some cryptocurrency firms – as well as some of his fellow commissioners – offer differing views on when and how the SEC will dive into industry regulation.

SEC Commissioner Hester Peirce recently told Yahoo Finance that it does not expect the commission to introduce direct regulation of cryptocurrencies this year. In the absence of direct regulation, she suggests applying the so-called Howey test – which determines whether to classify an asset as security – to digital assets. However, she hinted that the agency may regulate crypto tokens differently from other assets.

“It gets a little more difficult because the token works differently than some of these other assets; and the information you might want on that token is slightly different than what you might want on other types of assets, ”Peirce told Yahoo Finance.

For his part, Gensler notes that the SEC must protect those involved in cryptocurrency exchanges. “It is equally important to have investor protection for cryptocurrency exchanges, for lending platforms where people transact, buy and sell crypto tokens, have adequate disclosure about the tokens themselves, and protect the public from fraud and manipulation.” .

He didn’t offer a timeline for the new trading regulations during this week’s conversation, but previously focused on how to do it in 2022.

‘Keep Considering Proposals’ for a Bitcoin Spot ETF

On the issue of a Spot Bitcoin ETF, which many investors eagerly await, Gensler maintained his policy of not commenting on proposals currently under consideration by the SEC. However, he claimed that he would not approve any specific ETFs until the review process was completed to minimize the chances of “lying in progress”.

Last year, at a pivotal time, Gensler and the SEC approved an ETF based on Bitcoin futures. However, he moved slower on vehicles to invest in the current token price. Critics of the futures ETF structure would like a larger investor base to be able to invest in current prices.

In a recent letter to Congressman Tom Emmer, a Republican from Minnesota, Gensler pointed out that the review process is underway. The SEC continues to “consider proposals to list and market these products,” he wrote, without providing a timeline.

In any case, Gensler has repeatedly promised to look into the ETF’s proposals. “If you’re raising money from the public, and the public expects some profit based on the efforts of those people who raise the money, that’s within the definitions of a stock and the securities laws,” he said.

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

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