SEC Chair Gensler stands by enforcement strategy on cryptocurrency despite backlash
SEC chair Gary Gensler defended the agency’s enforcement-driven regulatory approach to crypto during an interview on Bloomberg Technology on Oct. 22.
In response to critiques about the SEC’s approach in the evolving digital asset space, Gensler reiterated the importance of utilizing established laws to safeguard investors and uphold market integrity.
Enforcement Approach
The SEC’s tactics have faced scrutiny, with critics arguing that relying on enforcement hampers innovation and creates uncertainty for companies.
Despite the criticism, Gensler maintained that the existing legal framework, which has been effective for nearly a century, is still relevant for regulating both traditional and emerging markets, including digital assets.
He stated, “We’ve benefited for nine decades from robust laws from Congress and rules from various agencies.”
Gensler explained that the SEC’s enforcement actions are based on principles of disclosure and conflict prevention. He stressed that transparency in markets is crucial for investor protection and lack of disclosure in many crypto projects has led to substantial losses for investors.
According to Gensler, “A lot of people have lost money in a field that’s not providing the fundamental disclosure about their projects and investment contracts. If a market’s ever going to have trust, it also needs to come into compliance.”
Gensler reaffirmed that the SEC will continue to prioritize investor protection, even if it affects the industry, stating, “That’s what we will continue to do… And, yes, even if it is related to this newer market where, as I said, all too many people have been hurt, all too many people lost money and lined in bankruptcy court to deal with their claims.”
Court Rulings
When asked about the SEC’s policy regulation in the Fifth Circuit Court of Appeals, Gensler highlighted that the regulator operates within the law and adjusts based on court interpretations.
Regarding a recent ruling where the court found the SEC exceeded its authority, Gensler noted, “If the courts interpret it differently, we adjust. That’s what we do, it’s part of our great democracy.”
Bitcoin’s Sweet 16
Gensler acknowledged the 16th anniversary of the Bitcoin whitepaper, attributed to Satoshi Nakamoto, falling on Halloween this year.
He emphasized that while cryptocurrency technology has advanced, principles of transparency and investor protection are still crucial. Gensler framed the SEC’s enforcement actions as necessary for ensuring industry compliance with legal standards.
He also asserted that decentralized ledger technology aligns with existing securities laws and argued that the current regulatory framework is adequate to oversee the industry.
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