Gary Gensler Firm On Stance That Most Tokens Subject To Securities Laws: 'Not Surprising That We've Seen Many Problems..'

Securities and Exchange Commission (SEC) Chair Gary Gensler remains steadfast in his belief that cryptocurrencies and crypto firms should be subject to federal securities laws. 

What Happened: Gensler is scheduled to testify before the House Financial Services Committee on Wednesday.

In his prepared testimony, Gensler acknowledges the widespread noncompliance with securities laws within the crypto industry.

“Given this industry's wide-ranging noncompliance with the securities laws, it’s not surprising that we've seen many problems in these markets,” Gensler said. "Given that most crypto tokens are subject to the securities laws, it follows that most crypto intermediaries have to comply with securities laws as well," he said.

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Why It Matters: Gensler also references the agency’s recent rulemaking efforts, specifically mentioning an April release that categorizes crypto platforms, including decentralized finance (DeFi) platforms, as part of the definition of an exchange.

"The SEC also has addressed the crypto security markets through rulemaking. We issued an opening release that reiterated the applicability of existing rules to platforms that trade crypto asset securities, including so-called "DeFi" systems," he adds.

Earlier on September 12, Gensler in a senate hearing confirmed that the agency is still evaluating a court's decision regarding Grayscale Investments' pursuit of a spot Bitcoin exchange-traded fund (ETF).

The SEC has decided to delay its approval of Ark Invest and 21Shares’ spot Bitcoin BTC/USD  ETF application on the Cboe BZX Exchange. The court filing states that the approval will now take place on January 10, 2024.

The proposed rule change was initially open for comment on May 15, and the SEC has chosen to use its 180-day extension window, which concludes on November 11.

Photo: Created with an image from Shutterstock and Third Way Think Tank on Flickr

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