SEC Chairman Gary Gensler pushed back against criticism of the agency’s enforcement-focused regulatory approach to crypto during an interview on Bloomberg Technology on October 22.
Responding to criticism that the SEC has not adapted its approach to the evolving digital asset space, Gensler reiterated the importance of using established laws to protect investors and maintain market integrity.
Application approach
The SEC’s methods are facing increased scrutiny as critics say the reliance on enforcement stifles innovation and leaves companies operating in uncertainty.
Despite these criticisms, Gensler maintained that the current legal framework has been sufficient for almost a century and remains relevant to regulate traditional and emerging markets, including digital assets.
He said:
“We have enjoyed nine decades of robust legislation from Congress and rules from various agencies.”
Gensler explained that the SEC’s enforcement efforts are rooted in the fundamental principles of disclosure and conflict avoidance. He emphasized that market transparency is key to investor protection and that the lack of disclosure in many crypto projects has led to significant losses for investors.
According to the president of the SEC:
“Many people have lost money in an area that does not provide fundamental information about their investment projects and contracts. If a market wants to gain trust, it must also comply. »
Gensler added that the SEC will continue to act as it must to protect investors, regardless of the impact on the industry. He said:
“That’s what we’ll continue to do…And, yes, even though it’s tied to this new market where, like I said, too many people have been hurt, too many people have lost money and ended up in bankruptcy court to deal with this. their demands. »
Court decisions
Gensler was then asked about the SEC’s political regulation in the Fifth Circuit Court of Appeals, which Bloomberg Technology co-host Ed Ludlow called “a kind of pro-business court,” and how whose regulator adjusts its position to court decisions.
The aforementioned court ruled, among other things, that the SEC “exceeded its statutory authority” by requiring more transparency about the fees and expenses of hedge funds and private equity firms.
Gensler responded that the regulator acts within the law and what the courts interpret the law, adding:
“If the courts interpret it differently, we adjust. This is what we do, it is part of our great democracy.
The sweet 16 of Bitcoin
Gensler also acknowledged a milestone for the crypto industry, noting that the 16th anniversary of the Bitcoin white paper – commonly attributed to the pseudonym Satoshi Nakamoto – falls on Halloween this year.
Gensler took this step to emphasize that even though the technology underlying cryptocurrencies has evolved, the principles of transparency and investor protection remain crucial.
He presented the SEC’s enforcement actions as a necessary part of ensuring the industry adheres to the same legal standards as traditional markets.
He further reiterated that decentralized ledger technology is not inconsistent with existing securities laws and argued that the current regulatory regime is sufficient to oversee the sector.
