- Securities and Exchange Commission (SEC) Chair Gary Gensler signaled Thursday he would cooperate with the Commodity Futures Trading Commission (CFTC) saying that, to the extent that “it needs greater authorities with which to oversee and regulate crypto non-security tokens and related intermediaries, I look forward to working with Congress to achieve this goal,” according to a copy of his prepared remarks.
- Addressing an industry conference, Gensler also forcefully made the case for the SEC’s broad authority over crypto, saying the “vast majority” of the nearly 10,000 tokens in the crypto market meet the definition of a security and are therefore covered under the securities laws.
- A former head of the CFTC, Gensler also outlined limits to his assistance, saying he was looking forward to working with Congress on various legislative initiatives but didn’t want to “inadvertently undermine existing securities laws underlying $100 trillion capital markets.”
Gensler’s talk comes as the SEC has been stepping up its efforts to regulate crypto and combat scams and fraud in the digital asset space.
The SEC announced plans in May to beef up its cryptocurrency unit to 50 enforcers by adding 20 supervisors, investigative staff attorneys, trial counsels and fraud analysts to the team. It issued guidance a month earlier saying companies should disclose the risks to investors from cryptocurrencies held on behalf of customers and account for the assets as liabilities.
Gensler, in his speech Thursday, emphasized the need for crypto regulation.
“These are not laundromat tokens: Promoters are marketing and the investing public is buying most of these tokens, touting or anticipating profits based on the efforts of others,” he said. “Therefore, investors deserve disclosure to help them sort between the investments that they think will flourish and those that they think will flounder. Investors deserve to be protected against fraud and manipulation. The law requires these protections.”
The CFTC’s chairman, Rostin Behnam, urged lawmakers in February to grant the agency an expanded role in regulating the crypto market, and give the regulator an extra $100 million to do so.
Sens. Debbie Stabenow, D-MI, and John Boozman, R-AR, introduced a bill last month that would define a new asset class — digital commodities — and let the CFTC oversee the trading of tokens, including Bitcoin and Ether, that meet that standard.