The Securities and Exchange Commission (SEC) Chair Gary Gensler reiterated his belief that most crypto assets are securities in his testimony before the U.S. Senate Banking Committee on Sept. 15.
According to Gensler, the offer and sales of these tokens fall under the securities laws, continuing that he has directed the Commission’s staff to work with the issuers to have their tokens registered.
Meanwhile, he noted that the commission would have to be “flexible” in applying the current law requirements.
Gensler also said that crypto intermediaries, like centralized exchanges and DeFi, would have to register with the SEC to facilitate these securities transactions.
According to Gensler, the entities’ registration would allow the regulator to delineate their function and possibly “disaggregate their functions into separate legal entities to mitigate conflicts of interest and enhance investor protections.”
The SEC chair noted that these entities might “one day (have to) register” with the Commodity Futures Trading Commission (CFTC) because they also facilitate tradings of non-security tokens against crypto security tokens.
Meanwhile, traditional financial firms looking to enter crypto might also have to register with the SEC. Chairman Gensler said:
“Firms operating in other well-regulated markets that want to enter the crypto market (would have) to do so in compliance with time-tested investor protection rules, (while) existing crypto security intermediaries need to do so in compliance with investor protection rules as well.”
Gensler highlighted that stablecoins have similar features to money market funds, other securities, and bank deposits. He continued that their attributes would determine whether they are “shares of a money market fund or another kind of security.” If they are a security, they would have to register with the financial regulator.
The SEC chairman has repeatedly urged the crypto community to come in and talk to the regulator. However, the community has criticized the commission for adopting a “regulation by enforcement” approach,