SEC chair Gensler criticizes crypto sector for non-compliance and ‘high centralization’

On Jun 25, 2024

SEC chair Gary Gensler reaffirmed previous criticisms of the crypto industry, stating that the sector is highly centralized with “significant non-compliance” in a Bloomberg interview on June 25.

He downplayed decentralization in the sector, stating that a few platforms are “centralizing and commingling things that we would never allow anywhere else.”

Gensler listed specific violations such as trading against customers, trading in front, and taking investments in a contract before listing.

He noted that many “leading lights” of the crypto sector are in jail or awaiting jail, adding:

“I say this and you giggle…but this is a serious thing … not ticky tacky … It’s about real protections for investors.”

Gensler said non-compliance extends beyond securities laws to the Bank Secrecy Act, the Commodity Exchange Act, and anti-money laundering laws.

Tokens are largely securities

Gensler said that many crypto platforms work with a significant number of tokens that, without prejudging, are securities under the “law of the land” and the Supreme Court’s stance.

The comments echo Gensler’s earlier statements on most cryptos being securities.

He emphasized that tokens are offered as investment contracts and said the US public is not receiving disclosures required by law. He noted that intermediaries, such as crypto exchanges and broker-dealers, handle hundreds of assets, adding:

“How many of those offerings don’t have some group of entrepreneurs in the middle? It’s sort of belies logic.”

Gensler said the issue, combined with non-compliance, has led the SEC to bring legal cases against numerous firms because violations harm the general public.

Gensler evades political questions

Gensler declined to answer political questions, including about Mark Cuban‘s earlier supposition that Gensler’s crypto policies could cost Joe Biden the election.

Gensler simply stated:

“I don’t speak about elections.”

Gensler also refused to comment on whether he is surprised by the broader political movement around crypto, saying:

“Other people can speak about elections.”

Gensler did not state whether spot Ethereum ETFs might receive final approval in the coming weeks or before elections but said the process is going “smoothly.”