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Qadir AK
Qadir AK
Author
Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
- Sep 12, 2023 06:39 UTC
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Crypto vs. SEC: Gary Gensler Vows to Stick to Tough Crypto Rules in Senate Hearing?
SEC Chair Gary Gensler is committed to regulating the cryptocurrency space despite recent legal setbacks.
Gensler still believes that most crypto tokens fit the criteria of investment contracts and are subject to securities laws.
The outcome of the regulatory battle between Gensler and the crypto industry will influence the direction of crypto in the US.
Despite recent legal setbacks, SEC Chair Gary Gensler is still committed to regulating the cryptocurrency space. He is set to deliver this message at a Senate Banking Committee hearing on Tuesday.
In his prepared testimony, Gensler highlighted the widespread noncompliance with securities laws in the crypto industry. He compared it to the pre-regulation era of the 1920s and stressed the need for regulatory oversight. According to Gensler, most crypto tokens fit the criteria of investment contracts, making them subject to securities laws.
SEC Continues Despite Losses – Why?
The SEC has recently faced legal defeats, especially in cases involving Grayscale and Ripple. These losses have encouraged other crypto companies facing SEC lawsuits to challenge the agency’s authority. Notably, a judge partially ruled in favor of Ripple, stating that the sale of XRP tokens didn’t violate federal securities laws.
Another setback for the SEC was when a judge deemed its rejection of Grayscale’s request to convert its Bitcoin Trust into an exchange-traded fund (ETF) as “arbitrary and capricious.”
Read More: Crypto vs. SEC: Will SEC Chair Gary Gensler Resign? Ron Hammond Weighs In
SEC vs. LBRY
LBRY, a blockchain-based payments network, is also contesting an SEC ruling instead of shutting down. In March 2021, the SEC sued LBRY, alleging that their token LBC wasn’t properly registered. This sparked a significant debate. Although the SEC didn’t accuse LBRY of fraud, it sought permanent injunctions and the return of all funds.
Jeremy Kauffman, LBRY’s CEO, expressed concerns that the ruling could harm many U.S. cryptocurrencies. Consequently, major players like Binance and Coinbase have threatened to leave U.S. markets unless clearer guidelines are provided.
Gensler’s Approach is Hurting Crypto
Critics argue that Gensler’s strict regulatory stance is harming the crypto industry. Some speculate about the potential political consequences of this approach, especially as the 2024 elections approach. There are concerns that Democrats may advocate for a more moderate stance to avoid negative electoral consequences.
Read More: “You are Making a Mockery of the US Government”: Crypto Community Slams SEC’s Ripple Appeal
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