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SEC Chairman Gensler Criticizes Cryptocurrency Industry for Non-Compliance and ‘High Centralization’
Chairman of the SEC Gary Gensler reiterated previous criticisms of the cryptocurrency industry, saying the sector is highly centralized with “significant non-compliance” in an interview with Bloomberg on June 25th.
He downplayed decentralization in the industry, saying some platforms are “centralizing and mixing things that we would never allow anywhere else.”
Gensler listed specific violations such as trading against clients, front-facing trading and taking investments in a contract before listing.
He noted that many “players” of the cryptocurrency industry are in prison or awaiting prison, adding:
“I say this and you laugh… but this is serious… not in bad taste… This is real investor protection.”
Gensler said the noncompliance extends beyond securities laws to the Bank Secrecy Act, the Commodity Exchange Act and anti-money laundering laws.
Tokens are largely securities
Gensler said many crypto platforms operate with a significant number of tokens that, without prejudice, are securities under the “law of the land” and the Supreme Court’s position.
The comments echo those of Gensler previous statements on most cryptocurrencies as securities.
He pointed out that the tokens are offered as investment contracts and said that the US public is not receiving the information required by law. He noted that intermediaries, such as cryptocurrency exchanges and broker-dealers, handle hundreds of assets, adding:
“How many of these deals don’t have a group of entrepreneurs at their core? In a way it defies logic.
Gensler said the problem, combined with noncompliance, has led the SEC to file lawsuits against numerous companies because violations harm the general public.
Gensler sidesteps political issues
Gensler declined to answer political questions, including on Cuban Markthat Gensler’s crypto policies could cost Joe Biden the election.
Gensler simply stated:
“I’m not talking about elections.”
Gensler also declined to comment on whether he is surprised by the broader political movement around cryptocurrencies, saying:
“Others can talk about elections.”
Gensler did not say whether Spot ETF on Ethereum could receive final approval in the next few weeks or before the election, but he said the process was going “smoothly.”
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Posted in: WE, Regulation