U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler is scheduled to testify on crypto markets and regulation at a U.S. Congress hearing on April 18, 2023.
In his prepared remarks, Gensler emphasizes that most crypto tokens are considered securities and underscores the importance of compliance with securities laws.
He warns that combining various functions in crypto intermediaries, such as exchange, broker-dealer, custodial, clearing, and lending, can lead to potential conflicts of interest and risks for investors.
Gensler stresses that crypto investors should benefit from the same protection as other investors and that calling oneself a DeFi platform does not excuse defying securities laws.
He highlights the current noncompliance in the crypto market, which endangers investors and public trust in capital markets.
The SEC has taken action through enforcement actions and rule proposals, such as the best execution and investment adviser custody rules that cover all securities, including crypto asset securities.
Gensler also mentions that the SEC staff has stated their views on public company accounting related to crypto assets and disclosure regarding significant crypto asset market developments.
The SEC recently reopened the comment period and provided supplemental information for proposed amendments to the definition of “exchange” under Exchange Act Rule 3b-16.
In his remarks, Gensler reiterates that Congress has given the SEC a mandate to protect investors, regardless of the labels or technology used.
He emphasizes that nothing about the crypto markets is incompatible with securities laws and quotes Justice Thurgood Marshall, who said that “Congress’s purpose in enacting the securities laws was to regulate investments, in whatever form they are made and by whatever name they are called.”