![]() “But what was interesting in that bankruptcy finding is a judge said these are not segregated protected assets. “You're absolutely right about the Celsius finding,” Gensler said. “Like we saw in the Celsius bankruptcy last year when thousands of customers were made unsecured creditors, isn’t it true that placing custody assets on the company's balance sheet could result in consumer assets being seized by creditors in the event of a bankruptcy, and that that would hurt consumers?” Senator Lummis asked. Senator Lummis (R-WY) asked Gensler a more technical question about a rule that requires companies, including banks, to place cryptocurrencies under custody on their balance sheets. lawmakers introduce bill to remove SEC Chair Gary Gensler I’m looking forward to staff’s recommendations on similar questions.” On the topic of the recent flurry of spot Bitcoin ETF applications and the ruling that the SEC must review Grayscale’s application to convert the Grayscale Bitcoin Trust (GBTC) into an ETF, Gensler said, “We are still reviewing that decision and reviewing multiple filings around Bitcoin exchange-traded products. When asked if the protection principles applied in other markets would help protect Americans from crypto abuses that cost consumers billions, Gensler said those principles would help protect investors, “but right now, unfortunately, there’s significant non-compliance, and it’s a field that is ripe with fraud, abuse, and misconduct.” Responding to a question related to companies providing full financial disclosures to investors before offering a product on the market, Gensler said that when it comes to crypto, he wanted to ensure that, “to the extent a crypto token is a security, that investors get a chance to make their decisions based on a full, fair, and truthful disclosure.” In response to an early question related to cryptocurrencies, Gensler maintained his position that the SEC should be the agency to oversee the growing industry, and at one point said that in his 44 years of experience related to finance, he has “never seen a field that is so ripe with misconduct. Gensler highlighted that the SEC has “issued a reopening release that reiterated the applicability of existing rules to platforms that trade crypto asset securities, including so-called ‘DeFi’ systems,” and said, “While our current investment adviser custody rule already applies to crypto funds and securities, our proposal updating it would cover all crypto assets and enhance the protections that qualified custodians provide.”Īfter finishing his prepared remarks, the floor was opened to questions from the Senators on the committee. ![]() Thus, we have brought a number of enforcement actions – some settled, and some in litigation – to hold wrongdoers accountable and promote investor protection.” It’s reminiscent of what we had in the 1920s before the federal securities laws were put in place. “Given industry’s wide-ranging non-compliance with the securities laws, it’s not surprising that we’ve seen many problems in these markets,” he said. He noted that various sections of the Securities Exchange Act of 1934 “require that intermediaries acting as securities exchanges, brokers and dealers, and clearing agencies are subject to the securities laws, and must register or satisfy requirements for an exemption.” “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,” Gensler said. He said that while “Congress could have said in 1933 or in 1934 that the securities laws applied only to stocks and bonds,” they actually included “a long list of 30-plus items in the definition of a security, including the term ‘investment contract.’ As I’ve previously said, without prejudging any one token, the vast majority of crypto tokens likely meet the investment contract test.” ![]() In his prepared statement, Gensler said, “There is nothing about the crypto asset securities markets that suggests that investors and issuers are less deserving of the protections of our securities laws.” ( Kitco News) - Securities and Exchange Commission (SEC) Chair Gary Gensler appeared before the Senate Banking Committee on Tuesday to answer questions related to a variety of topics, including artificial intelligence, mutual funds, investor protection measures, and the agency's series of enforcement actions against cryptocurrency companies. Receive a comprehensive recap of the day's top stories directly to your inbox. Get all the essential market news and expert opinions in one place with our daily newsletter.
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