SEC Chair Gary Gensler intensifies his offensive against the cryptocurrency industry as he takes legal action against Coinbase and Binance, alleging securities violations and raising concerns about the future of token trading.
In a recent interview, Gensler expressed his disapproval of the industry, stating, “We don’t need more digital currency.” With his increasingly stringent approach to regulating the sector, the cryptocurrency market experienced a noticeable decline in prices this week.
The #FireGaryGensler movement picks up steam in the midst of it as investors and market participants voice growing worries over Gensler’s strict regulatory stance. They purportedly felt upset by his activities, are becoming more outspoken about their displeasure with his strategies, and demand a change in leadership.
Gensler’s Offensive Remarks
SEC Chair Gary Gensler, who has recently garnered attention within the crypto industry, launched a bold offensive last Thursday. During his speech at the Piper Sandler Global Exchange & Fintech Conference, he emphasized that the major cryptocurrency exchanges targeted by the SEC had been adequately warned before facing legal action this week.
Gensler firmly stated, “When crypto asset market participants go on Twitter or TV and say they lacked ‘fair notice’ that their conduct could be illegal, don’t believe it.” Furthermore, Gensler suggested that the industry may have deliberately calculated the economic risks associated with non-compliance as a strategic business decision.
Gensler also placed significant emphasis on the regulator’s extensive provision of guidance to the markets regarding the classification of crypto assets as securities. He referred back to a 2017 report and the SEC staff’s “Framework for ‘Investment Contract’ Analysis of Digital Assets” released in 2019, as key points of reference.
Moreover, Gensler argued that issuers of crypto securities had the option to seek exemption from certain regulations, highlighting that the agency has long-established rules governing such requests.
Notably, Coinbase had recently called for clear and tailored regulations specific to the crypto industry from the United States. However, Gensler dismissed this notion, asserting that the SEC has already addressed this concern.
The great majority of cryptocurrency tokens already pass the investment contract test, Gensler added in his statement. He cited the definition of security provided by the securities laws passed by Congress as well as the Howey Test, which was developed following a 1946 Supreme Court decision. He has also emphasized that crypto firms are aware of the rules.
Crypto Prices Slides
In response to Gensler’s remarks, crypto investors have heeded the warning, leading to a palpable sense of fear within the market. As a result, four out of the top ten most valuable coins experienced a significant decline in value, plummeting by at least 15% over the course of this week.
Furthermore, the combination of the recent lawsuits and Gensler’s derogatory comments about the industry has triggered a sell-off, exacerbating the negative sentiment surrounding cryptocurrencies.