April 19, 2024
SEC Chair Gensler Sticks to Crypto Oversight Stance Amid Legal Setbacks
Latest Cryptocurrency News

SEC Chair Gensler Sticks to Crypto Oversight Stance Amid Legal Setbacks

Despite recent legal setbacks, United States Securities and Exchange Commission Chair Gary Gensler remains unwavering in his belief that his agency should have authority over the crypto industry, and he intends to convey this message to lawmakers on September 12th. Over the past two months, the securities regulator suffered defeats in cases against both Grayscale and Ripple, which were seen as significant setbacks for the SEC. In his prepared testimony for the Senate Banking Committee hearing, Gensler will reaffirm his perspective that crypto assets should be categorized as securities and subjected to regulation by his agency.

The Senate hearing focuses on the SEC’s oversight of specific matters. In his prepared statement, Gensler asserts, “Considering the extensive noncompliance with securities laws within this industry, it’s unsurprising that we’ve encountered numerous issues in these markets. This situation is reminiscent of the challenges we faced in the 1920s before the implementation of federal securities laws.”

Gensler consistently maintains that the majority of crypto assets pass the Howey test, a legal criterion for determining whether an asset or transaction qualifies as a security. He further elaborates, “Given that the majority of crypto tokens fall under securities laws, it logically follows that most crypto intermediaries must also adhere to securities regulations.”

On July 13th, Judge Analisa Torres delivered a significant legal setback to the SEC by partially ruling in favor of Ripple. Judge Torres determined that the sales of XRP tokens to retail consumers did not breach federal securities laws. Although the SEC is currently appealing this decision, it is anticipated that many other crypto companies facing lawsuits from the regulator will refer to it in their dismissal motions. On August 29th, the SEC encountered its second major loss in a case against Grayscale, which contested the rejection of its request to convert its over-the-counter Bitcoin Trust into a Bitcoin exchange-traded fund (ETF).

The judge, speaking frankly, deemed the SEC’s rejection of Grayscale’s request as “unreasonable and arbitrary.” These high-profile losses have seemingly motivated blockchain-based payments network LBRY to file an appeal after being found guilty of securities law violations in July. On September 7th, LBRY submitted a notice of appeal against the ruling, reversing its previous decision to wind down and indicating its intention to challenge the court’s decision that favored the SEC.

Image by frimufilms on Freepik

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