Gary Gensler, chairman of the SEC, has a warning for Coinbase and other cryptocurrency exchanges: The laws are clear, and they must be followed.
Gensler stated in a video that was shared on Twitter on Thursday that cryptocurrency exchanges must handle cryptocurrencies like securities and stop acting as though the rules are unclear.
According to Gensler, the law is clear. You must comply, register with us, handle conflicts of interest, and disclose critical information if you’re a securities exchange, clearinghouse, broker, or dealer. These regulations have served to safeguard investors like you for 90 years.
The regulator’s remarks came days after cryptocurrency exchange Coinbase filed a lawsuit against the SEC, demanding that the body be compelled to publicly disclose its response to a lengthy petition asking whether it would permit the crypto business to be regulated using current SEC standards.
Coinbase has been contending that the SEC has been inconsistent in how it regards cryptocurrencies and that the industry needs regulatory certainty since it received a Wells notice in March signaling that an enforcement action could be anticipated.
The SEC has taken action against Bittrex, Gemini, and Genesis, as well as a number of other parties suspected of manipulating digital assets, including Justin Sun, a prominent cryptocurrency investor, and Do Kwon, the disgraced founder of Terraform Labs.
Even though the argument over the matter has been obfuscated, Gensler tried to make the point in his video on Thursday, Office Hours, by stating that it is extremely clear that cryptocurrency exchanges are marketing and selling securities.
According to Gensler, when you invest money in a group venture with the idea that you would profit from the work of others, you have entered into an investment contract. The Securities and Exchange Commission (SEC) registration requirements apply to all intermediaries for investment contracts, including exchanges, brokers, dealers, and clearinghouses.
Gensler claimed that because the platforms don’t adhere to SEC standards, there aren’t any fundamental investor protections, which prevents customers from getting access to their money in the event of problems, such as bankruptcies.
