SEC’s Gensler Rebuffs Crypto Complaints, Says Gave Ample Warning Heat Was Coming

Gary Gensler, chair of the U.S. Securities and Exchange Commission, delivered a speech explaining his thinking after hammering Coinbase and Binance in back-to-back actions.

AccessTimeIconJun 8, 2023 at 4:30 p.m. UTC
Updated Jun 8, 2023 at 6:03 p.m. UTC
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U.S. Securities and Exchange Commissioner (SEC) Chair Gary Gensler argued Thursday there’s nothing special about the assets or exchanges in the crypto sector, and their backers can’t hide behind claims that their tokens provide utility.

“Some promoters of crypto asset securities contend that their token has a function beyond simply being an investment vehicle,” Gensler said in remarks prepared for the Piper Sandler Global Exchange & FinTech Conference, delivered in the same week his agency brought major enforcement actions against Coinbase (COIN) and Binance, accusing respectively the U.S.’s and the world’s largest crypto exchanges of trading in unregistered securities.

“Some additional utility does not remove a crypto asset security from the definition of an investment contract,” Gensler said, though he added that tokens built for exclusive use in their blockchain ecosystems can be exempted from such accusations. “The investing public generally buys these crypto assets, at least in part, anticipating profit based on the efforts of those token issuers.”

The SEC chair offered a full-throated defense of his agency’s most recent actions, arguing to his mainstream finance audience that they’d never be allowed to get away with the behaviors that are commonplace in crypto. “When crypto asset market participants go on Twitter or TV and say they lacked ‘fair notice’ that their conduct could be illegal, don’t believe it,” Gensler said. “They may have made a calculated economic decision to take the risk of enforcement as the cost of doing business.”He also pushed back on wide industry claims that it’s impossible for crypto platforms to register with the SEC.

“I disagree with the notion – and recent history disproves it – that crypto intermediary compliance isn’t possible,” he said. “I do recognize – and, again, think it’s appropriate – that it takes work.”

He added that it can’t be done just by “seeking a bunch of meetings with the SEC during which you’re unwilling to make the changes needed to comply with the securities laws.”

Coinbase CEO Brian Armstrong was also scheduled to speak at the same Piper Sandler conference on Thursday.

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Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.


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