In a notable swing of events, U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler is standing strong amidst his crypto apprehensions. His comments, found in a prepared testimony meant for the Senate Banking Committee, come in the wake of several court decisions concerning the crypto industry, notably Ripple and Grayscale Bitcoin ETF cases.
Gensler’s attention is firmly focused on the crypto sector flouting securities laws. He is concerned with the industry’s apparent noncompliance to the securities laws, leaving room for skepticism about the contribution of this nonconformity to the multitude of challenges in these markets.
In sticking to his guns, Gensler emphasizes a commonly debated point: Most, if not all, crypto tokens are likely seen as investment contracts through the eyes of the law. The ripple effect of this designation is that most companies operating in the cryptosphere have a legal obligation to adhere to associated securities laws.
The court’s recent judgment regarding Ripple and the company’s sales of the XRP token served as a beacon of hope for the crypto community. The court decided that Ripple’s actions did not equate to violation of securities law – a verdict that led to an electrifying response amongst the crypto advocates. Yet, the SEC is still in pursuit of an appeal, which leaves a murky future for other crypto entities standing against the commission, who might reference the Ripple case findings.
However, not all is lost for Gensler and the SEC as another court judgment favored the regulator’s stance. The ruling against Terraform Labs, executed by a fellow judge in the same legal arena as the Ripple case, disregarded the latter’s perspicuous verdict in favour of the SEC.
Gensler is set to bring to the table the recent enforcement actions and the impact of the agency’s rule proposals on crypto firms. He is also expected to underscore they can’t discuss “active, ongoing litigation”, which may rule out discussions on the high-profile legal tussles with companies such as Coinbase and Binance.
This whirlwind of events paints a complex picture. Is crypto’s noncompliance with securities laws the root of the industry’s woes, or does it bloom because of the industry managing to exist outside the traditional norms? Gensler’s stance and the industry’s reaction show that the crypto-securities law drama continues to keep us on tenterhooks.
Source: Coindesk
