The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has reiterated that most crypto tokens are securities, emphasizing that “the law is clear on this.” The Commodity Futures Trading Commission has requested Congress to have authority over the crypto spot market. Several bills were introduced this year in Congress to give the CFTC the authority.
Gary Gensler, Chairman of the SEC on Crypto Regulation
Recent attention has focused on the issue of which federal agency should regulate crypto market. Although Gary Gensler (chairman of the U.S. Securities and Exchange Commission) has stated that most crypto tokens should be considered securities and fall within the jurisdiction of his agency’s purview, lawmakers and many others believe it should be The Commodity Futures Trading Commission that regulates this sector. Three additional bills, which would make the CFTC the official regulator for crypto markets, were introduced by Congress this year.
Gensler answered a question regarding who should regulate crypto. According to Gensler, the chief of SEC explained:
This basic deal is overseen by our agency. When a group of entrepreneurs is raising money from the public and the public is anticipating a profit, they need disclosure — full, fair, and truthful disclosure, and that’s the core bargain in our capital markets.
The SEC chairman continued: “You get to take the risk but the person raising money or the persons raising money has to disclose various information to you. That’s how our capital markets work best, and the SEC is very good at this and that’s what we do.” He emphasized:
It is clear that the law does not allow for this. Based on all the circumstances and facts, I think most tokens can be considered securities.
On Monday, at the Financial Stability Oversight Council (FSOC) meeting, presided by Treasury Secretary Janet Yellen, Gensler reiterated: “Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities. Securities laws cover the sale and offer of crypto security tokens. Given that most crypto tokens are securities, it follows that many crypto intermediaries are transacting in securities and have to register with the Securities and Exchange Commission in some capacity.”
Gensler spoke out about the SEC’s collaboration with the CFTC.
Crypto intermediaries might need to register with both SEC (and Commodity Futures Trading Commission) (CFTC). I am aware that there are currently two registrants, one in broker-dealer and one in fund advisory.
The CFTC asked Congress for authorization to oversee the crypto-cash market. Rostin Behrnam, chairman of the CFTC, explained last week how cash markets are not under the control of the CFTC as it is a derivatives regulator. Therefore, he has asked Congress for “cash authorities, so that we can go in the bitcoin cash market, the ether cash market, and the other digital commodity token [markets],” the CFTC chief explained last week.
He also said that the SEC and CFTC will have to “figure that out legislatively” because crypto is a new asset class. “There are different components and characteristics of this asset class as opposed to traditional asset classes,” Behnam said, adding: “We have to rely on 70-year-old case law to determine what’s a security, what’s a commodity.”
Which regulator should oversee the cryptocurrency market? The SEC, or the CFTC. Please leave your comments below.
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