Gary Gensler, chairman of the Securities and Exchange Commission of the United States, stated on Wednesday that regulations for the bitcoin market already exist, but that noncompliance is still “rife with the business.”
He asserts that the regulatory body needs additional funding to keep up with the “growing complexity in the capital markets” and that it is underfunded.
Gensler will give his first-ever testimony before the House Financial Services Committee.
All facets of the American financial services industry, including banking, securities, and digital assets, are within the purview of the House Financial Services Committee.
Congressman asks Gensler about plans to clarify securities laws for digital assets
Congressman Sanford Bishop (D-GA) questioned the chairman on Wednesday whether the SEC had “any intentions to produce a regulation to explain how securities laws apply to digital assets,” reiterating a familiar cry from the cryptocurrency sector that has for years demanded “regulatory clarification.” In true Gensler style, he was insistent that the rules of crypto were clear.
The rules are already in place, sir. There are disclosure laws for when someone wants to solicit money from the public, and they are known as securities regulation, the SEC chair stated.
Gensler has stated time and time again that the majority of digital assets—but not the largest and oldest Bitcoin—fall under the definition of securities. Without passing judgment on any particular cryptocurrency token, he added, “you could look at virtually all of them and find a group of entrepreneurs with a Twitter account, a website, and individual users, and I can guess that most of you are not visited by decentralized, nonexistent management.”
According to Gensler, the cryptocurrency markets have resembled the Wild West and are plagued with non-compliance. He also noted that regulations were already in place to safeguard consumers.
When Congressman Bishop pressed him for further details on cryptocurrency regulation, he responded, “Frankly, among the ten or twelve thousand tokens, there are very few that don’t have a group of entrepreneurs in the middle whom the public is banking on. According to securities legislation, those are securities.
With the swift and unexpected collapse of the digital asset exchange FTX in November, the SEC has intensified its campaign against some of the most well-known cryptocurrency companies.
Gensler requests that Lawmakers increase SEC funding
In a hearing before the Subcommittee on Financial Services and General Government on Wednesday, Gensler underscored the markets’ rapid expansion and change, noting that more people than ever are trading and using tools and technologies that were not previously available.
He did issue a warning, pointing out that such expansion and change also increase the potential for wrongdoing and that the SEC requires sufficient funding to deal with corrupt individuals.
In 2022, the Division of Enforcement and Examinations received more than 35,000 distinct tips, complaints, and referrals from whistleblowers and other individuals, according to Gensler, who also noted that the Division employs over half of the SEC’s workforce.
Rep. Mark Pocan (D-Wis.) questioned Gensler on whether the SEC presently has the resources to look into concerns surrounding developing cryptocurrencies. Gensler said, “We’re overworked, sir. There is a sizable percentage of non-compliance in this industry. Although we have added to those resources, we could always need more.”
In light of this, Gensler requested more money for the SEC in the budget proposal for 2024, which would support 170 extra posts in addition to full-year financing for personnel recruited in 2023.
Gary Gensler to testify before Congress
Congressman Patrick McHenry, the head of the Financial Services Committee, stated in an interview that the SEC chairman would be questioned about his approach to the cryptocurrency ecosystem on April 18.
McHenry mentioned that it would be the SEC’s first oversight hearing during his interview. The discussion during the hearing will center on Gensler’s proposed regulations and strategy for crypto assets. The group will have significant overall control over the SEC, he continued, and it will take “setting down a regulatory framework for digital assets” seriously.
Throughout the years, the SEC chairman’s stance on cryptocurrencies has drawn considerable attention, with many Democratic party members expressing their disapproval of it. The party’s anti-crypto attitude, according to some in the business, might prove terrible for its 2024 election campaign.
In the first few months of 2023, American officials adopted a strict posture on cryptocurrencies, sending Wells warnings to many crypto companies, including Coinbase. Moreover, a fresh complaint against Binance has been submitted by the Commodities Futures Trading Commission. The crypto community has, however, always emphasized that Congress, not certain agencies, will decide on rules.