SEC Chair Gary Gensler defended the agency’s approach to regulating cryptocurrency, contending that his leadership has not differed much from that of former SEC Chair Jay Clayton.
“I am proud to follow on and continue on Chair Clayton's leadership. And I say this because we didn't actually differ much,” Gensler said at the Practising Law Institute’s Annual Institute on Securities Regulation in New York Nov. 14.
Gensler specifically drew parallels between his and Clayton’s approach to the crypto industry, referring to enforcement actions filed by the SEC. The chair said that Clayton “had already brought some 80 actions in the crypto field” during his tenure from May 2017 to December 2020, and “the SEC has continued that vigilance, not just under (his) leadership, but when I’ve been there.”
The crypto industry and Republicans in Congress have often been critical of Gensler’s approach to crypto, calling it a “regulation by enforcement” approach. Under Gensler’s leadership, the agency has filed enforcement actions against an array of crypto firms and exchanges, including Coinbase and Binance — the two largest crypto platforms — for allegedly operating unregistered exchanges.
There continues to be disagreement around which crypto tokens should be classified as securities.
Gensler noted that "not every asset is a security. Former Chair Clayton and I have both said that bitcoin is not a security, and the commission has never treated bitcoin as a security.”
However, “those parties offering or selling securities to the public need to register and give proper disclosure to the public,” Gensler said, adding that crypto intermediaries — such as broker-dealers, exchanges and clearinghouses — need to register with the agency as well.
“It’s not because I say, it’s because Congress has said; it’s because president after president said; it’s because courts have said it; it’s the law of the land,” he contended.
Gensler again warned about the dangers of the crypto industry, as he has done repeatedly.
“This is a field in which, over the years, there have been significant investor harm, and you don't have to just talk about 2022,” he said, referencing the collapse of former crypto exchange FTX.
At the end of his speech, Gensler seemed to indicate that his time at the SEC is coming to an end, noting that it had been “an honor” to serve alongside his SEC colleagues.
Former and future President Donald Trump pledged to fire Gensler during a speech in July, though SEC chairs typically step down when a new party takes over the presidency. While Gensler did not explicitly reveal plans to do so, his tone was that of a farewell.
“Elections have consequences, and they should. I deeply believe in democracy,” Gensler said. “But God, what an honor it's been to be with my fellow ‘SEC-ers.’”