SEC Chair Gensler Unwavering: Describes Crypto as Rife with 'Fraud, Scams, Bankruptcies, and Money Laundering' in Wednesday Address
SEC Chair Gary Gensler reaffirms his stance that cryptocurrencies should be subject to current securities regulations, despite industry resistance, during a speech at the 2023 Securities Enforcement Forum.
Because Bitcoin
October 25, 2023
Despite facing opposition from the crypto industry, Gary Gensler, the Chair of the Securities and Exchange Commission, remains resolute in his longstanding belief that many cryptocurrencies should be subject to existing securities laws, as per a recent The Block report. Gensler, who has previously asserted that cryptocurrency companies should adhere to the same regulatory rules as traditional financial institutions, reiterated his stance during a prepared speech at the 2023 Securities Enforcement Forum.
Gensler emphasized, "There is nothing within the cryptocurrency asset securities markets that indicates that investors and issuers should be excluded from the protections offered by our securities laws." He pointed out that back in 1933 and 1934, Congress could have limited the scope of securities laws to only cover stocks and bonds. However, Congress intentionally included a broad range of items in the definition of a security, including "investment contracts."
Gensler acknowledged the turbulent nature of the cryptocurrency industry, especially in the past year, marked by incidents like the collapses of crypto exchange FTX, crypto hedge fund Three Arrows Capital, and the algorithmic stablecoin Terra USD. He described the industry's problems as "unsurprising," citing rampant fraud, scams, bankruptcies, and money laundering within the space. Gensler also noted the paradoxical behavior of many entities in the cryptocurrency sector, who, while claiming to operate beyond existing regulations, are quick to seek legal protections when faced with financial challenges or disputes.
In addition to discussing the SEC's actions within the cryptocurrency sphere, Gensler touched upon other cases the agency has pursued, including one involving the former CEO of McDonald's. He quipped, "And don’t get me started on crypto. I won’t even name all the individuals we’ve charged in this highly noncompliant field."
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