Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), recently announced that crypto should be treated same as other capital markets. He noted that there’s no justification for treating the crypto sector different from other capital markets.
While advocating for the equal treatment in an opinion piece published in the Wall Street Journal on Friday, the executive noted that “SEC will serve as the cop on the beat to come in and talk to SEC staff.”
Speaking further about crypto regulation, he noted that “There’s no reason to treat the crypto market differently from the rest of the capital markets just because it uses a different technology. Recent market events show why it is critical that crypto firms comply with securities laws.”
According to the SEC executive, “In recent months, some crypto lending platforms have frozen their investors’ accounts or gone bankrupt. When it comes to bankruptcy, these investors have to get in line at the court.”
Stressing that the nature of a financial product shouldn’t determine how it should be treated, he maintained that “Across decades of cases, the Supreme Court has made clear that the economic realities of a product – not the labels – determine whether it is a security under the securities laws.”
Hence, it’s immaterial if the financial product is a lending platform, an app, a decentralized finance platform, or a crypto exchange, it must be treated as other capital markets. He then encouraged crypto lending and trading platforms “to come in and talk to SEC staff. Getting these platforms into compliance with the securities laws will benefit investors and the crypto market.”
In conclusion, he explained SEC’s next line of action. He said: “In the meantime, the SEC will serve as the cop on the beat. As with seat belts in cars, we need to ensure that investor protections come standard in the crypto market.”