Gary Gensler, the head of the Securities and Exchange Commission (SEC) in the United States, seems to be growing tired of constantly being asked about cryptocurrencies. In a recent interview on CNBC’s Squawk Box, Gensler commented that he receives a disproportionate number of questions about crypto compared to traditional finance. He pointed out that crypto is just a small part of the overall markets, with the SEC overseeing a $110 trillion capital market compared to the $2.4 trillion crypto market. Gensler emphasized that much of the crypto market does not comply with U.S. securities laws, leading to a higher prevalence of scams and frauds.
When asked if the media’s focus on crypto reflects the SEC’s priorities, Gensler quickly dismissed the notion, stating that it is simply a matter of where the attention is directed. He cited his frequent appearances on the show, where crypto is consistently brought up. Gensler skillfully avoided answering questions about the SEC’s Wells notice to Robinhood, which accused the company’s crypto services of violating securities laws. He explained that he cannot comment on any specific company but highlighted the lack of required disclosures for crypto investors. He also noted that many tokens are considered securities under U.S. Supreme Court interpretations of the law.
In response to Gensler’s comments, Paul Grewal, Coinbase’s legal chief, disputed the characterization of tokens as securities and urged Gensler to stop misleading the market. Grewal pointed out that even the SEC’s own attorneys have acknowledged in court that tokens are not securities. Gensler sidestepped questions about whether Ether (ETH) is a security and whether the SEC would approve a related exchange-traded fund (ETF). He simply stated that those matters would be considered by the five SEC commissioners in due course.
Gensler also addressed allegations from House Financial Services Chair Patrick McHenry that he had misled Congress regarding the SEC’s classification of ETH. Gensler clarified that the SEC does not discuss ongoing investigations or express opinions on compliance unless a case is brought. McHenry accused Gensler of intentionally misrepresenting the SEC’s stance, referencing Consensys’ lawsuit against the SEC, which claimed that the regulator planned to regulate ETH as a security.
Gensler defended his position, asserting that he provides accurate information to Congress about the SEC’s actions. He explained that there are many questions that he chooses not to answer during interviews or congressional hearings. The SEC has already filed six crypto-related lawsuits this year and brought 46 enforcement actions against crypto firms last year, marking a 10-year high and more than double the number from 2021. Several court cases initiated by the SEC are still ongoing, with defendants facing allegations of selling unregistered securities and engaging in illegal operations.
In conclusion, the regulation of cryptocurrencies remains a significant focus for the SEC, but Gensler emphasizes that it is just one aspect of the broader financial markets. He urges caution and compliance with securities laws in the crypto space to protect investors from scams and frauds.