SEC Chair, Gary Gensler, is taking a hard line on cryptocurrency. He spoke out at the Piper Sandler’s Global Exchange & Fintech Conference. His stance? He sees many problems in the crypto sector.
“We’ve seen this story before,” Gensler said. “It’s like the 1920s before federal securities laws. We’ve got hucksters and scam artists. Ponzi schemes are rampant.”
The SEC is currently battling Binance, Coinbase, and other crypto players. The agency is pushing for stronger industry-wide oversight.
Gensler Urges for More Transparency
Gensler notes instances of exchanges offering securities unlawfully. These entities didn’t register with the SEC. The SEC Chair emphasizes this as an investor concern. We must note that Gary once took part in an MIT lecture where he explained ledgers and Bitcoin. Crypto Twitter soon mentioned that under some tweets regarding his recent statements.
“Without compliance, investors lack protections… They need rulebooks, proper disclosures, and safeguards against conflicts of interest. They need oversight by a self-regulatory organization. They also need routine SEC inspections.”
Gary Gensler, SEC Chair
Gensler highlighted a case against Binance. The SEC claims that Sigma Chain, a Binance of affiliate, inflated trading volumes fraudulently. Sigma Chain is under the control of Binance founder Changpeng Zhao.
Gensler said he could list more wrongdoings. However, he summed up the issue: “In a market rife with fraud and noncompliance, there are too many to list.”
SEC Sees Industry Fallout
There have been crypto firm bankruptcies. BlockFi, Celsius, FTX, Genesis, and others have all failed. This leaves investors seeking redress in court.
But the SEC’s stance has also frustrated the crypto industry. Galaxy Digital’s CEO, Mike Novogratz, spoke out at the same conference. His company plans to move offshore due to a “legislative stalemate” in the U.S.
“Regulatory environment has made institutional crypto a tough place to be,” he said.
Crypto Companies Express Discontent
Coinbase has also voiced frustration. The company accused the SEC of ignoring its petition. The petition sought clarity on the regulatory treatment of digital asset securities.
Despite the SEC lawsuit, Coinbase plans to maintain “business as usual.” Meanwhile, Ripple criticizes the confusing U.S. regulations. The company believes it may drive crypto firms out of the country.
“Entrepreneurship and investment are flowing into other jurisdictions,” the Ripple CEO said. “Europe has been a significant beneficiary of the confusion that has existed in the U.S.” However, Ripple got a major win in the SEC vs. Ripple lawsuit recently, with Judge Torres stating that XRP is not a security. We will have to wait and see how everything unfolds, however.