- Securities, after all
- Protecting users is a priority
- SEC sets up a dedicated office for dealing with cryptocurrency
On Thursday, September 8, the Practicing Law Institute’s SEC Speaks conference was held. Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), talked about the upcoming approaches and the actions already taken to regulate cryptocurrencies.
From Gensler’s perspective, most cryptocurrencies qualify as securities. The SEC’s position remains firm – the basic principles of the SEC statute apply to all securities markets, including securities and intermediaries in the crypto market.
Gensler stated: “Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities. Offers and sales of these thousands of crypto security tokens are covered under the securities laws.”
According to the official, not all cryptocurrencies fall under the definition of securities due to their small number. However, bitcoin from his point of view is definitely a commodity and falls under the jurisdiction of the Commodity Futures Trading Commission (CFTC). Gensler compared bitcoin to a precious metal – an asset that is speculative and scarce, only a digital one.
Stressing the need to protect investors, the SEC chief said: “I’ve asked the SEC staff to work directly with entrepreneurs to get their tokens registered and regulated, where appropriate, as securities.”
Some tokens have already been registered as securities and the requirements are being met. Nevertheless, while the SEC’s position is unambiguous, Gensler believes that there can be flexibility for disclosure principles, given that the cryptocurrency sphere is not typical of today’s economy.
Regarding crypto intermediaries, Gensler clarified, “I’ve asked staff to work with intermediaries to ensure they register each of their functions — exchange, broker-dealer, custodial functions, and the like.”
He added, “I look forward to working with crypto projects and intermediaries looking to come into compliance with the laws. I also look forward to working with Congress on various legislative initiatives while maintaining the robust authorities we currently have.”
On Friday, September 9, the SEC revealed the creation of two offices to handle crypto filings. “Office of Crypto Assets” and “Office of Industrial Applications and Services” are planned for fall 2022. They will complement the SEC’s existing 7 offices and will be grouped by industry expertise. They are planned to be established as part of the agency’s Division of Corporation Finance’s Disclosure Review Program (DRP).
“The Office of Crypto Assets will continue the work currently performed across the DRP to review filings involving crypto assets,” the securities regulator clarified, elaborating:
“Assigning companies and filings to one office will enable the DRP to better focus its resources and expertise to address the unique and evolving filing review issues related to crypto assets.”
The point of the new offices is to provide more of support focused on DRP’s financial management.