U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has clarified the SEC’s litigation-oriented strategy for regulating the crypto industry. Gensler emphasizes the need to protect the American public from risks and harms in the crypto space.
Gensler Defends Litigation-Centric Approach
SEC Chairman Gary Gensler recently testified before the House Financial Services Committee, addressing concerns surrounding cryptocurrency regulation. During the hearing, Congressman John Rose questioned Gensler about the SEC’s litigation-heavy approach despite lacking litigator expertise among senior staff.
Gensler’s response centered on the prevalence of fraud and non-compliance within the crypto field, emphasizing that protecting the American public is his primary concern. He stated, “This is a field where the American public is at risk and being harmed every day on these platforms that are commingling and often trading against their customers.”
Rulemaking and Regulatory Focus
Gensler clarified that the SEC has not solely relied on litigation but has also engaged in rulemaking activities. This includes rules related to broker-dealers and defining exchanges and custody roles.
Congressman Rose suggested that the SEC’s actions appeared politically motivated, which Gensler vehemently denied. He stressed that his primary focus is safeguarding the interests of the American public, refuting any political agenda.
Gensler’s Commitment to Investor Protection
Responding to Rep. Tom Emmer’s concerns about regulatory harassment impacting digital asset innovation, Gensler reaffirmed his commitment to protecting investors harmed by crypto-related fraud and manipulation. Emmer, however, voiced skepticism about Gensler’s impartiality.
Rep. Al Green expressed concerns about crypto being seen as a Ponzi scheme, to which Gensler highlighted the distinction between crypto tokens and traditional currency. Gensler emphasized that crypto tokens do not fulfill the essential functions of currency, such as serving as a store of value, unit of account, and medium of exchange.