Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), does not seem at all willing to change his opinion regarding the regulation of crypto exchanges.
According to Gensler, crypto platforms are only one group of intermediaries required to comply with the existing law. On the other hand, some exchanges have already pronounced the risk of their exit from the US market.
Full details below.
Gary Gensler: Will the SEC Chairman’s attitude weaken American innovation on the crypto front?
As anticipated above, US Securities and Exchange Commission (SEC) Chairman Gary Gensler said during testimony before the House Financial Services Committee that the agency will continue to insist that crypto platforms comply with the strict laws imposed.
Faced with Gensler’s uncompromising approach, the committee’s chairman, Patrick McHenry, said the regulator’s aggressive approach could drive such companies away from the United States and consequently hinder innovation on the crypto side.
As we know, the SEC chairman maintains that he has never owned digital assets, instead classifying them as “highly speculative.” However, his position on the blockchain industry was not so drastic when he became SEC Chairman and he was even intrigued by the crypto sector.
In any case, the barrage of criticism toward Gensler does not end there, for there has been much more in recent days from House Republicans.
These latter, specifically, said that the SEC’s actions against crypto exchanges have weakened, and will continue to do so, America’s position as a center for blockchain innovation.
Indeed, the chairman of the committee, Representative Patrick McHenry, stated the following:
“Your approach is driving innovation abroad and endangering American competitiveness.”
McHenry, also believes that the agency should not rely on regulation by enforcement, classifying this method as insufficient and unsustainable.
Finally, McHenry concluded:
“You’re punishing digital asset companies for allegedly failing to comply with the law when they don’t know it will apply to them.”
The views of SEC Chairman Gary Gensler on crypto exchanges
Following widespread criticism, Gensler has been forced to refute the claim that US crypto exchanges do not know how to comply with the law.
In fact, the SEC Chairman is leveraging the regulatory framework presented many years ago and the fact that crypto platforms, as a group of intermediaries within the market, should do nothing more than follow the guidelines imposed on them. As emerges from his statements:
“We have a whole field in the cryptocurrency industry that understands the law, and if they provide exchange services, broker-dealer services, crypto security token clearing services, they should comply. They have no choice. They are generally not compliant and must comply.”
In the face of all this, some of the most prominent crypto exchanges have not been slow to make their voices heard.
Such is the case with Coinbase, whose CEO Brian Armstrong recently stated that his platform would leave the US market if the legislation does not become adequate.
Nevertheless, Gensler remains uncompromising, continuing to claim that he has never owned Bitcoin or any other crypto and again emphasizing how highly speculative he believes the asset class is.
As written above, the SEC Chairman was not so hostile toward the blockchain industry during the first months of his election as head of the Commission. In any case, despite his interest in the market in 2021, today Gensler seems to take a different view:
“While I’m neutral on the technology, even intrigued, I spent three years teaching it, leaning on it, I’m not neutral on investor protection. If someone wants to speculate, that’s their choice, but we have a role as a nation to protect those investors from fraud.”
Could Coinbase really be leaving the US market?
As anticipated above, Brian Armstrong, CEO of Coinbase, argues that crypto entities based in the US and UK could indeed move to other countries if clear and appropriate legislation towards the industry does not come along.
As such, according to Armstrong, US and UK authorities should implement appropriate rules for the industry to prevent the outflow of local companies to other destinations. As per the statement:
“This is why we need clarity on legislation and regulation, because if the UK doesn’t have it, if the US doesn’t have it, these companies will be built in offshore havens.”
However, Coinbase’s CEO acknowledges the efforts the UK is making in a peaceful direction toward crypto exchanges, as opposed to what is happening in America.
Hence, when Armstrong was asked if Coinbase is really in danger of moving to another country, his answer was as follows:
“Everything is on the table, including transfer or whatever else is needed. I think in a number of years, if we don’t see regulatory clarity emerging in the US, we may need to consider investing more in other parts of the world.”