Gensler hinted at the recognition of cryptocurrencies as securities

Garry Gensler-min

Any cryptocurrencies with the exception of bitcoin can be classified as securities. Such a conclusion can be drawn from an interview with SEC head Gary Gensler for new york magazine.

According to the official, cryptocurrencies are generally created by a group of entrepreneurs who use many complex and legally opaque mechanisms to attract investors.

Bitcoin is fundamentally distinguished by the unique history of its creation.

According to Gensler, cryptocurrencies are securities as investors hope to make a profit based on the efforts of intermediaries. From a legal point of view, such assets meet the definition of securities, and therefore fall under the jurisdiction of the SEC.

The head of the Commission attributed the regulator’s delayed oversight steps to the “relaxed approach” of the previous administration and the gullibility of cryptocurrency supporters in Congress. The latter, following the society, were “carried away” by digital assets, not without the influence of advertising during the Super Bowl and the support of celebrities like Kim Kardashian.

Using the example of settling claims against Kraken regarding the staking program, Gensler recalled the need to separate the functions of crypto firms to avoid “mixing services rife with conflicts of interest.” They are not allowed in traditional finance, he added. In this regard, full, reliable disclosure of information to consumers is essential.

Gensler noted that the SEC has all the necessary tools to effectively oversee the industry. He noted that almost all types of crypto transactions already fall under the jurisdiction of the department. The exceptions are spot bitcoin transactions and the purchase / sale of goods or services using digital assets.

The head of the SEC expressed admiration for the blockchain technology underlying cryptocurrencies, but questioned the ability of digital assets to act as a store of value and an alternative payment mechanism.

Recall that in November 2022, a member of the US House of Representatives, Tom Emmer, criticized the head of the Commission for the failure to regulate the digital asset industry, which led to the collapse of FTX.

Earlier, Gensler called the regulation of cryptocurrencies a priority of work in 2023. Later, the Office made a proposal to the public to expand and strengthen the role of qualified custodians in relation to digital assets.

Prior to this, Gensler called the cryptocurrency market centralized. He urged the platforms to apply to the SEC regarding the recognition of an asset as an investment contract. The official also warned of the possible prosecution of unregistered bitcoin exchanges.

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