In a move signaling neither retreat nor compromise, SEC Chairman Gary Gensler is doubling down on his criticisms of the crypto industry ahead of his much-anticipated Senate testimony. Known for his defiant stance against what he perceives as regulatory loopholes and grey areas in the rapidly evolving crypto landscape. Gary Gensler is expected to worsen what crypto investors called chockpoint 2.0.
Gary Gensler just won’t give up on regulating crypto
In his first remarks following the second recent court setback in his agency’s extensive legal battle with the crypto sector, U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler is doubling down on his crypto criticisms.
According to written testimony set to be delivered to the Senate Banking Committee on Tuesday, Gary Gensler is holding the line on warning about the sector flouting securities laws, following decisions in the Ripple case that renewed crypto advocates and the even more pronounced failure of the SEC’s Grayscale bitcoin ETF dispute.
On the eve of a routine SEC oversight hearing, Gensler stated the following in remarks released on Monday.
Given this industry’s wide-ranging noncompliance with the securities laws, it’s not surprising that we’ve seen many problems in these markets […] The vast majority of crypto tokens likely meet the investment contract test. 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.
Gary Gensler
The court ruling in the case involving Ripple and its sales of XRP argued that Ripple’s retail sales of XRP tokens did not contravene securities law. Despite the SEC’s pursuit of an appeal, a number of crypto companies facing lawsuits from the regulator are likely to cite this case in their own motions to dismiss.
In a recent ruling against Terraform Labs, at least one additional justice from the same court overturned the Ripple judgment. While Gary Gensler will be highlighting recent enforcement actions and two of the agency’s rule proposals that affect crypto firms – a proposal on custody and one on redefining the exchange definitions to formally incorporate crypto platforms – he will also advise the lawmakers.
Moreover, he won’t be able to discuss any “active, ongoing litigation,” which may set aside the topics the industry is most interested in, such as the SEC’s high-profile cases against Coinbase and Binance.
US crypto entities push for clear regulation
While Gary Gensler doubles down on crypto regulation, which some see as a misfire, a collection of crypto and blockchain firms has formed a Texas crypto advocacy group with the goal of achieving clear legislation.
According to a Sept. 11 announcement, a consortium of crypto and blockchain firms have joined forces to form a Texas crypto advocacy group. The organization is known as the “Crypto Freedom Alliance of Texas,” and it was created by a16z crypto, Coinbase, Ledger, Bain Capital Crypto, Blockchain Capital, and Paradigm. The organization advocates for “the development of coherent and predictable regulations for digital assets in Texas.”
According to the release, the Crypto Freedom Alliance will support educational activities aimed at government officials, corporations, non-profits, and other organizations in an effort to highlight the significance of Web3 in the state of Texas.
One leader in the group stated that, in addition to campaigning for reforms to unincorporated organization laws, the group would also advocate for crypto-friendly tax legislation, bank charter laws, and bank regulations. Wyoming’s bank charter regulations, he said, were “a positive example” of what crypto-friendly governments may do.
Texas is a renowned crypto mining location in the United States. Genesis Digital Assets manufactures the majority of its CPUs in Texas. Hut8, a crypto mining firm, relocated 6,400 mining computers to the state on July 3.
Gary Gensler’s firm stance on Crypto Chokepoint 2.0 is a watershed moment for the entire financial ecosystem. For his high seat in Washington, his move is neither arbitrary nor reactionary; it is a calculated endeavor aimed at injecting accountability, security, and regulatory oversight into the nebulous Wild West landscape of crypto.
Is this what he portrays to crypto investors and industry heads? By doubling down on this regulatory framework, Gary Gensler is signaling a maturation in our collective approach to crypto assets.
