SEC Chair Rebuts Criticism, Asserts Crypto Companies Deliberately Ignored Rules
SEC Chair Gary Gensler strongly defended the U.S. Securities and Exchange Commission (SEC) against accusations of crushing the crypto industry. During a Piper Sandler conference in New York, he countered claims.
Further, he stated that many companies in the space intentionally made “calculated economic decisions” to disregard SEC regulations.
Reiterating his perspective, Gensler emphasised that the “vast majority” of crypto tokens satisfy the requirements to be classified as securities and should undergo registration with the SEC. As a result, compliance with securities laws is mandated for the majority of crypto exchanges.
Industry Backlash and Allegations on SEC
Following the SEC’s lawsuits against Coinbase and Binance for alleged violations of securities laws by failing to register their operations, the crypto industry has launched a counterattack against Gensler.
Coinbase CEO Brian Armstrong, an outspoken critic of the SEC, labeled Gensler an “outlier” among Washington policymakers. He criticised his response to registration inquiries as “icy.”
Further, both Coinbase and Binance deny the SEC’s allegations and intend to vigorously defend themselves in court. American lawmakers have also joined the scrutiny, calling for a Department of Justice investigation into Binance. This is based on the SEC’s allegations of false statements made to Congress.
SEC Efforts and Freezing Binance’s U.S. Assets
The SEC has been progressively asserting its jurisdiction over the crypto industry under Gensler’s leadership. The agency argues that most tokens qualify as securities and should adhere to disclosure rules.
Anticipated to have a ripple effect, the recent lawsuits targeting Coinbase and Binance are poised to influence additional U.S. crypto exchanges. This stems from the SEC’s widening scope in identifying cryptocurrencies that fall under the classification of securities.
In a federal court filing, the SEC requested the freezing of Binance’s U.S. assets to ensure they remain within the country. Binance CEO Changpeng Zhao countered by stating that Binance US holds approximately $2 billion in customer assets, which have not left the platform unless withdrawn by customers.
Clarity of Rules and Compliance Efforts
The crypto industry has called for clearer rules amid disputes over the SEC’s authority. Gensler addressed the notion of unclear regulations and pointed out that the agency has solidified its position through over 100 crypto enforcement actions and additional guidance. He emphasised the need for effort to achieve compliance and acknowledged the appropriateness of the work involved.
Impact and Companies’ Responses
In response to the regulatory crackdown, many companies have enhanced compliance controls, halted product developments, and expanded operations beyond the United States.
Furthermore, this trend is anticipated to persist as the industry adjusts to the ever-evolving regulatory landscape. Circle Internet Financial, a cryptocurrency operator, announced the hiring of Heath Tarbert, former chair of the Commodity Futures Trading Commission, as chief legal officer and head of corporate affairs, effective July 1.