- SEC Chair Gary Gensler said the agency won’t impose a China-like crypto ban as that authority lies with Congress.
- Most tokens might be some form of security, he said at an SEC oversight hearing on Tuesday.
- Gensler fielded questions from a lawmaker who slammed him for running “roughshod” over investors.
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Gary Gensler said the Securities and Exchange Commission has no plans to ban cryptocurrencies as the authority in fact lies with Congress, adding that most tokens meet the test of being some form of security.
The SEC chairman made the comments at a House of Representatives hearing Tuesday, after Republican lawmaker Ted Budd asked whether the US securities regulator could follow China in imposing a blanket ban on cryptocurrencies.
“No. I mean, that would be up to Congress,” Gensler said.
“I think that many of these tokens do meet the tests of being an investment contract or a note or some other form of security that we bring them within the investor protection remit of the SEC,” he added.
The concern in the crypto world is that the US government might limit or outlaw digital assets, much as it did with gold in 1933. Gensler has previously said that crypto exchanges need to register with the agency because some of their tokens or products might be securities.
The People’s Bank of China declared crypto transactions illegal late last month, a move that analysts said was in line with the central bank’s stance over the past decade.
“Our approach is really quite different,” Gensler told the House Financial Services Committee.
He noted the SEC is looking into how best to ensure the industry protects investors and consumers, and to follow anti-money laundering and tax compliance laws. It would also look into the issues that stablecoins could raise, he added.
Gensler’s comments echoed those made recently by Federal Reserve Chair Jerome Powell, who said the US central bank has no intention to ban cryptocurrencies.
At the same House hearing, Rep. Patrick McHenry questioned Gensler on the SEC’s stance on digital assets, and lambasted him for being vague about what actually constitutes a digital asset.
“Some of those comments you have made have raised questions in the marketplace and made things less than clear,” McHenry said. “You’ve made seemingly off-the-cuff remarks that move markets, you’ve disregarded rule-making by putting a statement out without due process, and you’ve essentially run roughshod over American investors.”
Gensler said that the agency follows the administrative procedures act, which requires a regulatory body to publish a general notice of proposed rulemaking.
McHenry asked Gensler whether he had reviewed a safe harbor proposal drawn up by SEC Commissioner Hester Pierce. The proposal is aimed at providing digital network developers with a three-year grace period to develop a platform with a registration exemption from federal securities laws.
“Commissioner Peirce and I have talked on her thoughts around a potential safe harbor,” Gensler said. “I think that the challenge for the American public is that if we don’t oversee this and bring in investor protection, people are going to get hurt.”