US SEC Chair has this to say about cryptos and Securities laws

Paigambar Mohan Raj
Source: Protocol

Gary Gensler, Chair at the US Securities and Exchange Commission (SEC), was recently interviewed by Yahoo Finance. The interaction shed light on many subjects related to crypto and its regulation.

One of the key takeaways from the interview was that crypto companies might be exempt from some securities laws. Gensler hopes the exemption will push more cryptocurrency firms to comply with regulation laws. He highlighted that many firms were operating outside compliance standards. However, he did not name any company.

Gensler has frequently stated that many crypto tokens come under securities rules and should be registered as securities. Gensler says Bitcoin and “maybe” Ethereum can be exempt from the securities definition, and he has previously called Bitcoin a commodity. Moreover, any platform that trades these tokens should be registered as an exchange.

In any case, the SEC is considering providing a customized set of regulations for the crypto industry. Given that stock disclosures might not be the same as those for a crypto token, Gensler claims that changing the regime for stock disclosures to cryptocurrency certainly makes sense.

Gensler stated,

“Just as there’s difference between asset-backed securities and an equity offering, there may be differences here as well.”

Nonetheless, the option to comply might not be a choice soon. Global authorities are taking a more hands-on approach to cryptocurrencies. This is no surprise, as the recent crypto crash has severely hurt many investors. Besides that, major cryptocurrency firms have gone underwater because of the same.

SEC vs. Ripple lawsuit to provide an example for crypto?

While Gensler is taking a friendly stance towards crypto, the SEC is locked in a legal battle with Ripple Labs. The lawsuit has been ongoing since December of 2020, and the lawsuit claims Ripple Labs raised over $1.3 billion through illegitimate means.

Regardless, the lawsuit currently centers around a speech made by William Hinman in 2018. In the speech, Hinman stated that Ethereum turned from a security to a non-security, which was when the SEC had no precise definitions for crypto-assets.

The SEC tried its best to keep the speech draft under wraps. They filed for attorney-client privilege, but the court turned down their motion. The judge went as far as to call the SEC’s move “hypocrisy.”

The SEC’s unclear definitions regarding crypto-assets have caused much confusion. However, the US is rushing for some legislation. Stablecoins are one of the top goals on the agenda, and there are many indications that this will happen sooner rather than later.