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SEC Chair Gary Gensler: Crypto Tokens Cannot Hide Behind Utility Claims

The US Securities and Exchange Commission (SEC) Chair Gary Gensler asserted on Thursday, June 8, that the assets and exchanges in the cryptocurrency sector are not exceptional, and the supporters of these assets cannot use claims of utility to hide behind them.

According to Gensler’s prepared remarks for the Piper Sandler Global Exchange & FinTech Conference, he stated, “Some promoters of crypto asset securities contend that their token has a function beyond simply being an investment vehicle.” This statement was delivered in the same week when his agency took significant enforcement actions against Coinbase (COIN) and Binance, accusing the largest crypto exchanges in the US and globally of trading unregistered securities.

Gensler continued, “Some additional utility does not remove a crypto asset security from the definition of an investment contract.” However, he acknowledged that tokens created exclusively for use within their blockchain ecosystems might be exempted from such accusations. He explained, “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 strongly defended the recent actions taken by his agency, addressing a mainstream finance audience and highlighting that behaviours commonly seen in the crypto industry would not be tolerated in traditional finance. Gensler stated, “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.” He added, “They may have made a calculated economic decision to take the risk of enforcement as the cost of doing business.”

Gensler also challenged the widespread industry belief that crypto platforms cannot register with the SEC, stating, “I disagree with the notion – and recent history disproves it – that crypto intermediary compliance isn’t possible.” However, he acknowledged that achieving compliance requires effort, saying, “I do recognize – and, again, think it’s appropriate – that it takes work.” He emphasized that compliance cannot be achieved merely by seeking meetings with the SEC without being willing to make the necessary changes to comply with securities laws.

Image by Third Way Think Tank on Flickr

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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