As the Securities and Exchange Commission (SEC) winds down the Biden era of regulation, Chairman Gary Gensler took a moment to reflect on his accomplishments during his tenure as its head.
Speaking at PLI’s Annual Institute on Securities Regulation, Gensler said effective markets do not happen by chance, and it is only due to the rules that the US’s securities market is the largest and most effective in the world.
In his parting words, Gensler addressed the topic of crypto and the SEC’s approach towards digital asset innovation. Stating he never believed Bitcoin was a security, he said the other 10,000 or so digital assets are pretty much securities—according to the courts.
Gensler leaned on his predecessor Jay Clayton and his treatment of crypto, noting that legal action against Ripple commenced during the Clayton Commission.
Gensler shared two specific aspects of his treatment of crypto:
“First, those parties offering or selling securities to the public need to register and give proper disclosure to the public. Second, the intermediaries—broker-dealers, exchanges, clearinghouses—need to be registered and properly regulated as to conflicts, disclosures, and business conduct.”
He also noted that his Commission approved Bitcoin ETFs, touting the benefits of disclosure for investors.
He admonished crypto as causing “significant investor harm.”
“Further, aside from speculative investing and possible use for illicit activities, the vast majority of crypto assets have yet to prove out sustainable use cases.”
While Gensler defends his legacy at the nation’s securities regulator, crypto innovators who sought a compliant path to offering services will probably disagree with his depiction. They frequently reported efforts to work with the Commission only to be turned away. So, registration of issuers and exchanges was not an option.
As for what is next at the SEC, the digital asset industry anticipates a more amenable environment for creating clarity in the rules that also protect markets and investors.
