Following lawsuits against Binance and Coinbase, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has made his intentions regarding the digital asset class clear. They are titles, nothing less, he claimed in a recent interaction.
They must be registered with the agency before being offered to investors or meet requirements to apply for exemptions, a CNBC report the city. He added that exchanges listing cryptocurrencies must also register with the regulatory agency.
Crypto tokens are investment contracts
“Congress has included a long list of over 30 items in the definition of a security, including the term ‘investment contract’…. the vast majority of crypto tokens pass the investment contract test. … Thus, crypto security issuers must register the offer and sale of their investment contracts with the SEC or meet the requirements for an exemption,” Gensler said.
He was speaking remotely at the Piper Sandler Global Exchange and FinTech Conference in New York on June 8.
“Heddlers. Fraudsters. Scammers. Ponzi schemes. The public lined up in bankruptcy court.
That’s how the SEC Chairman described the current cryptocurrency scene, calling it a throwback to the days before the federal securities laws went into effect in 1933.
Highlighting the role of regulators in cryptocurrency trading, Gensler asserted that people’s trust in the capital market should not be undermined by allowing unregulated crypto securities markets.
“Crypto securities markets should not be allowed to undermine the well-deserved trust the public has in capital markets. Crypto markets should not be allowed to harm investors,” he added.
The SEC Chairman also dismissed the idea that there was a lack of clarity about whether crypto assets are securities.
“When crypto asset market participants go on Twitter or on TV and say they haven’t been given ‘reasonable notice’ that their conduct might be illegal, don’t believe it. … They may have made a calculated economic decision to take the risk of enforcement as the cost of doing business.
Lawsuits against Binance and Coinbase
Citing irregularities, the SEC filed lawsuits against Binance and Coinbase earlier this week. The charges against Binance include selling unregistered securities – BNB and BUSD – and operating as an unregistered securities exchange and broker-dealer in the United States.
The lawsuit seeks to return “ill-gotten funds” and permanently bar the company from operating as a crypto and securities firm in the United States. Acting on the SEC’s legal ruling, the US District Court for the District of Columbia issued a subpoena against Binance CEO Changpeng Zhao (CZ). However, CZ was exempted from an in-person appearance.
In particular, he tasked the two exchanges with fund mixing, brokerage and clearing house functions. Binance has also been accused of mixing funds. Reacting to the news, Coinbase CEO Brian Armstrong said“In regards to the SEC complaint against us today, we are proud to represent the industry in court to finally get clarity on crypto rules.”
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