Gary Gensler said that securities laws helped defeat financial fraud in the 1930s and will help the cryptocurrency industry today
Gary Gensler, head of the Securities and Exchange Commission (SEC), compared the cryptocurrency industry to the American stock market of the 1920s, full of “huckster and fraudsters”.
Speaking at the Piper Sandler Global Exchange & Fintech Conference on June 8, Gensler said that the passage of securities laws in 1933 and 1934 in the United States helped fight stock market scams. These same laws will also help “clean up” the cryptocurrency market.
“With widespread non-compliance with the law, it’s honestly not surprising that we’re seeing a lot of problems in these markets. We’ve seen this story before. It’s reminiscent of what we had in the 1920s before the federal securities laws were introduced. Hucksters, fraudsters, and Ponzi schemes. And the public was lining up in bankruptcy court,” said the SEC Chairman.
The solution, according to Gensler, is for cryptocurrency issuers and trading platforms to comply with securities laws. He said that the laws of the 30s allowed American securities markets to “flourish” for the next 90 years. And today’s “cryptocurrency securities markets” should also benefit from these laws. Therefore, they are no “less worthy of the protection” of those laws.
The SEC argues that most cryptocurrencies fall under the definition of securities. And even if the tokens have additional utility (which the cryptocurrency community cites to deny the regulator’s position). That doesn’t take “cryptocurrency is a security” out of the definition of an investment contract, Gensler said.
He explained that cryptocurrency exchanges must comply with securities laws. And including the requirement to separate “exchange, broker-dealer and clearing functions.” In his view, such separation “helps mitigate conflicts that can arise when such services are combined.”
Our experts note that two days earlier, speaking on CNBC on June 6, Gensler said that cryptocurrencies are essentially unnecessary. In his opinion, digital fiat currencies-the dollar, the euro, and others-are sufficient.
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