Gary Gensler Defends His Anti-Crypto Crusade

Gary Gensler gave a prepared statement today (September 12th) trying to justify his agency's crackdown on crypto. In particular, he has filed a flurry of lawsuits for noncompliance with securities laws. Despite losing some high-profile cases (against Ripple and Grayscale) he still believes he is in the right and insists his agency will continue to force compliance.

The main issue is whether or not cryptos are securities, i.e. do they constitute an investment contract as determined by the Howey Test. Gensler believes virtually all cryptos are securities: "the vast majority of crypto tokens likely meet the investment contract test." Because of this belief, he suggests are intermediaries are crypto brokers "most crypto intermediaries have to comply with securities laws as well." Because nearly the whole crypto-sphere does not comply with securities laws, Gensler thinks it's reminiscent of "what we had in the 1920s before the federal securities laws were put in place."

Gensler also indicated that he wants to make two important rule changes. First, he wants to change how an exchange is defined, though he did not provide info on this. Second, he wants to change the investment adviser custody rule. It already applies to crypto funds and securities, but now "our proposal updating it would cover all crypto assets and enhance the protections that qualified custodians provide."

Do you think Gensler has a basis for his beliefs and actions?

https://www.c-span.org/video/?530313-1/securities-exchange-commission-oversight-hearing