SEC Chair Gary Gensler recently appeared on CNBC’s Squawk Box to address the ongoing lawsuits filed by the SEC against Binance and Coinbase. Both platforms have been accused of operating as unregistered securities exchanges. Gensler’s main message was that crypto exchanges like Coinbase and Binance are evading American regulation, stating that “there’s been clarity for years.”
Gensler pointed out that the lack of controls, deception, and conflicts have led to these platforms operating outside of US securities laws. He used the example of Binance CEO Changpeng Zhao allegedly commingling customer funds with those of his trading firm Merit Peak Limited, which Binance has denied, as a reason for the necessity of increased oversight.
When discussing the value of certain crypto tokens, Gensler asserted that there is no need for more digital currencies as the US dollar, euro, and yen already serve this purpose. He elaborated that economies with multiple ways to move value have not been successful historically. However, Gensler admitted that if there is real value in crypto tokens, compliance with regulations may help build trust and possibly change the business model for crypto exchanges.
Gensler maintained that the SEC’s recent actions are “pro-innovation” and aimed at fostering trust, contrary to Binance’s claim that the SEC is hindering America’s role as a global hub for financial innovation and leadership. Apart from its focus on Binance, the SEC is also taking steps to bring other crypto exchanges into proper compliance.
In terms of the SEC’s objectives in court, Gensler noted that the agency needs only to prove that one crypto token is a security and should be properly registered. As the SEC continues its enforcement efforts against crypto companies, the impact on the ongoing debate surrounding the use of digital currencies alongside traditional fiat currencies remains to be seen.