In a recent hearing of the United States Senate Banking Committee titled ‘Oversight of the U.S. Securities and Exchange Commission’ SEC chair Gary Gensler had very little new to offer to the crypto industry. Chairman Brown said in his opening statement that many Wall Street observers had complained that the SEC is “moving too fast” and that there are “too many rules, too fast, too hard to comply with,” Senator Sherrod Brown (D-OH) said.
True to his attitude towards crypto, Gensler continued to claim authority over crypto, telling the lawmakers that “The SEC is the cop on the beat watching out for your constituents.” However, also keeping in line with his usual narrative that ‘the rules of the road are clear’ and crypto firms just ‘need to come in and register,’ Gensler said that crypto needed no extra provisions saying, “current investment adviser custody rule already applies to crypto funds and securities.”
Crypto Needs No Further Rules?
He said: “Congress could have said in 1933 or in 1934 that the securities laws applied only to stocks and bonds. Yet Congress included a long list of 30-plus items in the definition of a security, including the term ‘investment contract.’ […] Given that most crypto tokens are subject to the securities laws, it follows that most crypto intermediaries have to comply with securities laws as well.”
Currently, there seems to be some disagreement over whether the United States does or doesn’t need specific laws to regulate crypto. While Gary Gensler believes most cryptocurrencies are securities, and therefore, fall under the jurisdiction of the SEC, not everyone agrees with this view.
Stuart Alderoty, Chief Legal Officer at Ripple, recently stated, “Some would like you to think that a digital token can in and of itself be a ‘digital asset security.’ It can’t. Standing alone, it’s just a commodity or a virtual currency.”
U.S. Court Sets New Standard
In saying that, he referred to Judge Torres’ recent decision in the lawsuit the SEC brought against Ripple. In the ongoing legal case, the agency claims that Ripple sold XRP as a security. However, Judge Torres ruled that XRP, in and of itself was not a security. Alderoty stated, “the SEC only has jurisdiction over securities […] and the they don’t like that. Like a hammer they want everything to be a nail. But the law doesn’t work like that.”
While the United Kingdom, Europe, Singapore, Australia, and others all work on rules for the sector, Gensler and his agency have been accused of stifling innovation in the United States. The agency has filed several lawsuits against prominent industry players, such as Kraken, Coinbase, Binance, Grayscale and others. However, just a few weeks ago, a U.S. court sided with Grayscale and ordered the SEC to review its decision to reject a Bitcoin Spot ETF conversion.
Decision on Bitcoin ETF Still Looming
In Tuesday’s hearing, Senator Bill Hagerty (R-TN) questioned the SEC’s willingness to approve a Bitcoin ETF, asking Gensler what else the agency needed. Chair Gensler responded, “We are still reviewing that decision. We have multiple filings around Bitcoin exchange-traded products, so it’s not just that one you mentioned, but it’s multiple others who we’re reviewing.”
The approval of a Spot Bitcoin ETF is one of the most anticipated topics in the crypto industry at present. There is a growing list of applications, with large asset managers such as BlackRock and VanEck to name just a few. Franklin Templeton is the latest applicant to seek permission for the much-anticipated ETF. The SEC has delayed decisions on most of these applications until mid-October.
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