SEC Chairman Gary Gensler posted a video statement on Twitter this week criticizing crypto firms for widespread non-compliance with securities laws and other regulatory requirements.
Concerns Over Lack of Oversight
In the video, Gensler referred to the crypto sector as a “wild west” due to significant issues with non-compliance globally. He pointed to problems with anti-money laundering efforts, protecting investors, and failure to register as securities.
“Pervasive fraud and other non-compliance in the crypto asset space really undermine the protection of investors, make it difficult for there to be confidence in the crypto asset space and difficult for those firms that are actually compliant to compete,” Gensler stated.
Community notes were added to Gensler’s Tweet by Twitter’s Global Vice President and Deputy General Counsel Paul Grewal, which highlighted the crypto industry’s call for clearer guidelines from the SEC.
Criticism of Lack of SEC Guidance
The SEC has been criticized for not providing sufficient clarity on what constitutes a security in the crypto space. Regulators have often relied on enforcement actions after the fact rather than proactively setting rules.
Coinbase petitioned the SEC to create new rules for digital assets last year, but the SEC denied the petition, claiming it lacked adequate proposal text. The SEC also dismissed the notion that existing securities laws are unworkable for crypto firms. However, Coinbase has appealed the SEC’s decision.
As the debate continues, firms are calling on regulators to provide clearer rules and guidelines to foster a well-regulated, compliant crypto industry.