Gary Gensler has publicly reprimanded cryptocurrency service providers who have failed to register their products with the Securities and Exchange Commission (SEC).
Amidst several backlashes that the watchdog has received from the public and many cryptocurrency industry players, the Chairman of the SEC pointed out in a video which he posted on Twitter that these entities were violating securities laws.
Gensler Says Crypto Firm Perception Does Not Matter
At the same time, Gensler noted that these crypto platforms maintain a faulty perception of the current securities laws. According to the SEC Chair, all that really matters is what the United States law is and not what it is said to be.
“Intermediaries for investment contracts are required to comply with securities laws & register with @SECGov. Instead, many crypto platforms are contending that their investment contracts are something else,” Gensler tweeted. “The law cares about what something actually is, not what you call it.”
SEC Chair Excludes BTC in Crypto Security Classification
Notably, the SEC chairman has faced several criticisms for his classification of all crypto tokens as securities except Bitcoin (BTC).
“Everything other than bitcoin, you can find a website, you can find a group of entrepreneurs, they might set up their legal entities in a tax haven offshore, they might have a foundation, they might lawyer it up to try to arbitrage and make it hard jurisdictionally or so forth,” he said.
Owing to this classification, many crypto projects have been made to face lawsuits and pay huge fines.
Blockchain-based file-sharing and payment network LBRY was indicted by the SEC for offering unregistered securities and after several back and forths, the company lost the lawsuit to the regulator. For more than two years now, blockchain payment company Ripple Labs has been on a securities law violation case with the SEC.
Gensler Regards Crypto Securities Law as Ultimate
Lawmakers and crypto stakeholders have continued to request for more crypto legislation to guide the nascent industry.
However, at a recent hearing, Gensler claimed that there was no need for additional regulation as the existing securities laws are sufficient to guide the crypto assets market. In his 4-minutes Twitter video, he pointed out that what the regulation needs is compliance from crypto firms.
“Crypto markets suffer from a lack of regulatory compliance. It’s not a lack of regulatory clarity. […] The law is clear, if you’re a securities exchange, clearinghouse, broker or dealer, you must come into compliance, register with us.”