Gary Gensler, the head of the United States securities regulator, seems to be growing tired of the constant barrage of questions about cryptocurrency. In a recent interview on CNBC’s Squawk Box, Gensler pointed out that crypto is just a small part of the overall market that the Securities and Exchange Commission (SEC) oversees.
Comparing the $110 trillion capital market to the $2.4 trillion crypto market, Gensler noted that much of the latter does not comply with U.S. securities laws, leading to an “outsized piece of the scams and frauds and problems in our markets.” When asked if the media’s focus on crypto is due to the SEC’s attention on the industry, Gensler quickly dismissed the notion, stating that it’s simply a function of where the attention lies.
During the interview, Gensler avoided answering questions about the SEC’s Wells notice to Robinhood, which accused the company’s crypto listing and custody services of violating securities laws. He emphasized that he cannot speak about any specific company but highlighted the lack of required disclosures for crypto investors. Gensler pointed out that many tokens are considered securities under U.S. law, as interpreted by the Supreme Court.
Paul Grewal, Coinbase’s legal chief, who is currently engaged in a legal battle with the SEC, challenged Gensler’s statements, asserting that tokens are not securities. Grewal argued that even the SEC’s own attorneys have admitted this in court.
Gensler also avoided answering whether Ether (ETH) is considered a security and if the SEC would approve a related exchange-traded fund (ETF). He stated that such filings would be addressed by the five SEC commissioners at the appropriate time.
In response to allegations from House Financial Services Chair Patrick McHenry that he misled Congress, Gensler defended himself by stating that the SEC does not speak about ongoing investigations or express opinions on compliance unless a case is brought forward. McHenry accused Gensler of intentionally misrepresenting the SEC’s position, citing Consensys’ lawsuit against the SEC, which claimed that the regulator planned to regulate ETH as a security.
Gensler emphasized that the SEC accurately informs Congress about its actions, even though there are many questions that they choose not to answer publicly. The SEC has already filed six crypto-related lawsuits this year and brought 46 enforcement actions against crypto firms last year, which is a 10-year high and more than double the number from 2021. Several court cases related to crypto are currently ongoing, with numerous defendants facing allegations of selling unregistered securities and engaging in illegal operations.
In the realm of crypto regulation, the question remains: Does SEC Chair Gary Gensler have the final say?