Gensler Says SEC Is Fine Going After Crypto With Its Current Authority
With the SEC chairman saying he needs more money and more reach overseas but there’s a new Congress that might complicate crypto legislation, it can be tough to predict what will happen in 2019.
U.S. Securities and Exchange Commission Chairman Gary Gensler isn’t waiting for new powers from Congress to enforce securities laws against crypto companies, though he said Wednesday it would be good to have more money and additional reach beyond U.S. borders.
Digital-asset firms need the same disclosures that traditional equity exchanges have in place, which the SEC has in place. Asked whether the agency would push out tailored crypto rules next year, Gensler said “it doesn’t require any.”
“The rules are there,” he said. “Law firms know how to advise their clients how to comply.”
The loss of funds at FTX taught a harsh lesson: running a global platform with no walls between customer and capital is dangerous. Gensler underlines that crypto firms can’t do all we did.
“Your field will not last long outside of policy norms,” he warned. “Some of these platforms want to continue to run their commingled platform, and do lending, trading, hedge funds, an exchange function, and a custody function. We said they had to separate it out.”
The Gensler agency has expanded its enforcement team, but only time will tell if they’ll be able to penetrate major cryptocurrency platforms. A lingering question hangs over the SEC’s potential takeover of Ripple’s XRP as a security– up until now, Ripple may not have been subject to SEC authorities because it didn’t meet the ‘Howey Test’ for being a security. That hasn’t been confirmed yet, however, but an earlier court case has shown that Judge Preska agreed that crypto startup LBRY should be classified as a security for selling their LBC tokens.
Currently, the SEC has not directly taken legal action against US exchange Coinbase for listing securities without registering as a national securities exchange. However, the SEC has listed several tokens they consider to be unregistered securities in their latest enforcement action, which was taken against the company’s platform.