In a recent interview, SEC Chair Gary Gensler defended the agency’s approach to regulating the cryptocurrency market, emphasizing the need for investor protection and compliance with existing securities laws. He reiterated his stance that while Bitcoin itself is not a security, many of the thousands of other crypto tokens are, and the market has been rife with non-compliance.
Gensler addressed criticisms that the SEC has focused more on enforcement actions than establishing clear regulations, stating, “We have laws. Congress has passed those laws…But a sector of this field, crypto, the investing public is investing based on projects…without prejudging any one of them. Many of them are under the securities laws. And in that field, there’s a lot of noncompliance.” He pointed to the high level of speculation in the crypto market, contrasting it with traditional markets driven by fundamentals. “This crypto field seems to trade mostly on sentiment and much less on fundamentals,” Gensler observed. He urged projects with underlying fundamentals to comply with disclosure requirements under securities laws.
The interview also touched on the SEC’s recent legal challenges, including a Coinbase case where a judge criticized the agency’s explanations. Gensler maintained that the SEC’s actions are aimed at protecting investors from fraud and manipulation, which he believes are prevalent in the crypto space. He also highlighted the agency’s efforts to address conflicts of interest arising from crypto exchanges trading against their customers.
Responding to concerns about the SEC hindering the development of a transformative new industry, Gensler pointed to the establishment of Bitcoin exchange-traded funds (ETFs) based on futures within his first few months in office. He also emphasized the SEC’s focus on broader market reforms, including shortening the settlement cycle for investors, stabilizing the U.S. Treasury market, and strengthening corporate governance rules. “I’m very proud of the record,” Gensler stated, arguing that the focus on crypto, while attracting attention, should not overshadow the agency’s work in the larger capital markets.
Gensler acknowledged Bitcoin’s speculative and volatile nature but noted its widespread global adoption. He distinguished Bitcoin from other crypto tokens, suggesting that many lack demonstrable use cases and underlying fundamentals, potentially jeopardizing their long-term viability.
