While Gary Gensler’s introductory speech as the new chairman of the US Securities and Exchange Commission (SEC) still seems like a positive signal for the crypto world, the hearing before the US Senate Banking Committee was a huge disappointment.
As Jeremy Hogan, a popular lawyer in the XRP community has revealed, there may be too many dark cravings for the crypto space. Hogan said:
“I never like to see too much negativity in this video, but the truth is that the risk warning posted in Gensler’s testimony last week today is really disappointing for me. In the crypto world, I see a lot of clouds on the horizon. ”
Gensler’s speech was not about blockchain or cryptocurrencies for a long time. However, more than an hour later, a senator asked what the US Congress and SEC could do to establish a “forward-thinking regulatory framework”. Gensler answered the stereotype, turning it into the question of how its affiliate SEC would provide investor protection from companies:
“As I taught at MIT on these topics, I think these innovations are a catalyst for change. Bitcoin and other cryptocurrencies brought a new perspective to payments and financial inclusion, but at the same time raised new investor protection issues that we still need to address. If approved at the SEC, I will work with the commissioners to encourage investment, but will also essentially ensure investor protection. For example, if something is a security, it is subject to securities law, it enters the SEC. ”
A senator also asked the future SEC chief about his “approach to digital assets”. Gensler said it will handle cryptocurrencies in a “technology-independent” manner. According to Hogan, this would mean he would treat blockchain and DLT like any other company or securities and put them in the old drawer. Gensler specifically gave the following answer:
“It’s always important to update our market control to new technologies, but I believe most of them are technology independent. I say this because these new technology cryptocurrencies and potentially CBDC, it is important to stick to our investor protection principles. […] So I think someone from the SEC is offering an investment contract and securities to the extent that they offer it under the responsibility of the SEC and their stock exchanges operating there. […] If not, it’s a commodity as it is considered Bitcoin. ”
Senator from Wyoming, a very progressive US state where Ripple recently launched a new company, discussed Gensler’s view that the SEC is a “black hole” for progress so far and whether that will change. Gensler also put aside the question of how the SEC can help blockchain companies, referring again to investor protection instead.
Finally, Hogan stated that Gensler’s responses coincide with the latest SEC “risk warning” for digital assets, which is not a good sign for the crypto world. The SEC can maintain its notoriety for regulating litigation and lawsuit threats. Eventually, even Ethereum could be targeted by the SEC under Gensler’s guidance, Hogan said. Hogan said:
“According to Gensler, the SEC will scare companies over compliance, and this will happen through lawsuits and threats of lawsuits. […] The SEC has been extending its definition of what a security is to include everything, including Ethereum, over the past few years. Notice how he chose Bitcoin as a non-security but didn’t mention Ethereum. […] And this is consistent with what happened late last week, with the issuance of the SEC risk warning. ”