The US regulator’s head says crypto firms have a tendency to be built on “false narratives.”
US Securities and Exchange Commission (SEC) chairman Gary Gensler on a keynote speech made Monday, pushed back on criticism that the lead regulator has not provided useful guidance for crypto firms looking to remain compliant with US federal law.
The speech was made at the 27th annual Financial Markets Conference, held by the Atlanta Fed. Currently ongoing, this year’s theme is “Old Challenges in New Clothes.” Amongst the speakers at the event included prominent financial authorities like Gensler, and several participants in the digital asset economy.
Gensler’s speech barely grazed upon the topic of the digital assets market – but moderator Tom Barkin, president and CEO of the Federal Reserve Bank of Richmond, raised a question regarding the SEC’s ongoing lawsuit with Coinbase, and the head regulator’s thoughts on whether his agency had fallen behind on enforcement with crypto.
In response, Gensler doesn’t believe that the SEC is falling behind – citing the 140 cases that the SEC had brought on over the years. But most importantly: Gensler was quick to say to the public that crypto firms are built on fraudulent business models.
“It’s a false narrative that they are decentralized,” he said. “They tend towards centralization, and you can find a website and a team of entrepreneurs around most of these.” He went on to say that “their business models tend to be built on taking customer funds and commingling with them.”
The SEC has gained a reputation within the cryptocurrency industry for not establishing comprehensive, clear-cut, nor innovative regulations – with some pointing the root cause to Gensler’s attitude towards crypto, in a move which industry players call “regulation by enforcement.”
Upon being requested for clearer regulations, Gensler appeared to be annoyed at the question, insisting that “there is nothing about a new technology that makes it non-consistent with public policies”.
Gensler continued that if crypto companies find difficulty in the SEC’s rules – declaring what the SEC sees as securities on their platforms in taxes – then the agency “stands ready to help them come into compliance.”
Meanwhile, there’s dissent boiling within the SEC, pointing out objections within Gensler’s own claims. Crypto-friendly SEC commissioner Hester Peirce points out that there is currently “no way to register” with the SEC. Republican lawmakers have similarly come out with statements, saying Gensler’s “push for firms to ‘come in and register’ is a willful misrepresentation of the SEC’s non-existent registration process.”
As the US’s crypto industry continues to wade in their regulatory murky waters, the European Union is in the process of bringing forth a set of comprehensive regulatory measures for the crypto industry operating in the region.
