- The SEC Chair said that any project that raises funds from the public has to follow the security laws.
- Gary Gensler said that he is not against innovation taking place in the crypto space.
The U.S. Securities and Exchange Commission (SEC) has yet to come with a clear definition of which crypto projects come under security laws. However, during his recent interview with CNBC, SEC Chairman Gary Gensler said that any crypto projects raising funds from the public should register themselves with the SEC. Thus, the crypto tokens launched as a part of it shall be treated as securities.
Speaking at CNBC’s Squawk Box, the SEC chair talked about regulatory compliance in the crypto space. Gary Gensler’s response came when asked about ConstitutionDAO, a project that tried to buy a copy of the U.S. Constitution through crypto crowdfunding.
However, the SEC Chairman refused to comment on whether (ETH) qualifies as a security or not. He said:
I won’t comment on any one project. But you raised an important point. Crypto tokens, I will call them, are raising money from the public. And are they sharing with the public the same set of disclosures that helps the public decide and are complying with truth in advertising? Gensler asked.
Furthermore, Gensler noted that the major thing that he sees lacking for the crypto industry to be compliant with securities laws is the full disclosure of information.
SEC Chair has no object to crypto innovation
SEC Chairman Gary Gensler said that he has no objection to the innovation taking place in the crypto space. However, he thinks that it shouldn’t happen outside the regulatory purview. Gensler said:
There’s thousands of these projects basically trying to raise money from the public so they can back an entrepreneurial idea. That part’s alright. It’s called innovation. But it’s about bringing it into the securities laws.
He further stated that many crypto projects will argue that they are not securities, but “the facts and circumstances suggest that they are investment contracts, they’re securities, and they should register.”
When it comes to regulating the crypto space, Gensler’s stand has been nothing new. In fact, the SEC chairman had recently asked the U.S. Congress to give SEC more regulatory oversight to deal with the developments in the crypto space.
SEC has also been fighting a legal battle with the San-Francisco-based blockchain startup Ripple over the alleged use of XRP crypto as securities. The year-long battle will finally come to conclusion as expected by many market analysts.
Most likely, the SEC will be working with other regulators closely to bring further clarity on crypto market regulations.