Since the launch of the cryptocurrency market in the early 2010s, it has grown faster than anyone could’ve anticipated. What started out as a small concept quickly matured into a bustling market that is now worth hundreds of billions of dollars. At the same time, the debate around the regulation of crypto has raged on endlessly. Now, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has taken center stage in the debate, stirring up controversy with his seemingly hand-crafted policies on crypto.
SEC Chairman Gary Gensler Affirms Existing Securities Regulations Apply to Majority of Crypto Tokens and Coins
At a recent hearing before the House Appropriations Subcommittee on Financial Services and General Government, SEC Chairman Gary Gensler testified that rules for the crypto market already exist and that the vast majority of coins and tokens in the crypto space are securities according to existing regulations.
Gensler has been very firm in his stance that when it comes to digital assets, the law is found in securities regulation. He has made it clear that the SEC will continue to enforce these regulations and ensure that the crypto market is safe and secure for investors.
Gensler’s Video Caused Stir in Crypto Community
However, the arrival of a 2018 video of Gensler has caused some friction among the crypto community, raising questions on the true motive of the SEC chair. In the video, Gensler is heard stating that cryptos are in the same category as commodities or cash and that they are not securities. According to Gensler’s earlier remarks, “three-quarters of the market is not securities, it’s just a commodity, cash, crypto.”
This video caused a stir in the crypto community as figures such as Coinbase CEO Brian Armstrong responded with a simple “wow,” and ShapeShift Founder Erik Voorhees tweeted, “When does someone get arrested for fraud?”
Though the video was taped when Gensler was serving as a professor at the Massachusetts Institute of Technology, the change in his opinion has left some crypto investors cynical. U.S. lawyer Preston Byrne commented that when it comes to Gensler’s stance on the crypto market, we should consider that he is now speaking in two interwoven capacities – not just as a professor, but also as a law enforcer.
Byrne explains that as a professor he can discuss the different aspects of the crypto market theoretically, but as a law enforcer, he must enforce the laws as they stand.
Debate Arises Over SEC Chairman Gensler’s Interpretation of Howey Test in Regulating Crypto Market
Despite this argument, other crypto enthusiasts such as blockchain technology specialist Jonathan Schmalfeld have argued that Gensler’s interpretation of the Howey Test should remain the same regardless of his professional role.
In light of these seemingly conflicting comments, the question remains as to whether or not Gensler is truly spearheading policy on the crypto market. And, if he is making the final calls, does he have the authority to enforce the views expressed by his present capacity?
Gensler Calling the Shots
It is certain that American investors will expect some clarity from the SEC in the near future. Even though the Commission has ramped up its enforcement of the securities laws against various crypto firms and platforms, the reach of Gensler’s direct involvement is unclear. Gensler’s lengthy career both in the U.S. government and the private sector has given him the level of distinction and experience to shape the industry in a powerful way.
Given his current role at the SEC, Gensler has a unique opportunity – whether it is to expand the existing securities laws to cover the crypto industry, or to bring the industry into conformity with the existing law. It is now up to Gensler and the SEC to decide how and if to regulate the rapidly growing cryptocurrency market. For now, Gensler may indeed be calling the shots, but what comes next is uncertain.
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