Key takeaways:
- Gary Gensler intends to inform Congress of this on September 12 and is adamant that his organization should be in charge of crypto.
- Gensler continued his recurring theme by claiming that almost all crypto assets pass the Howey test.
Gary Gensler, the United States Securities and Exchange Commission chairman, appears unmoved by a string of recent legal failures. Gensler intends to inform Congress of this on September 12 and is adamant that his organization should be in charge of crypto.
The loss to Ripple and Grayscale in the past two months for the securities regulator was viewed as a severe setback for the organization.
However, Gensler will reaffirm the idea that crypto assets are, in fact, securities and should be governed by his agency in his prepared testimony for the Senate Banking Committee hearing.
Regarding the SEC’s oversight of specific issues, the Senate is holding a hearing. It was mentioned in Gensler’s prepared testimony:
“Given this industry’s wide-ranging noncompliance with the securities laws, it’s not surprising that we’ve seen many problems in these markets. We’ve seen this story before. It’s reminiscent of what we had in the 1920s before the federal securities laws were put in place,”
Gensler continued his recurring theme by claiming that almost all crypto assets pass the Howey test, which is a legal standard used to establish whether or not an asset or transaction qualifies as a security. According to Gensler:
“The vast majority of crypto tokens likely meet the investment contract test.”
On July 13, after largely siding with Ripple, Judge Analisa Torres delivered the SEC’s first significant legal setback. Judge Torres determined that the retail consumer sales of XRP tokens did not break any federal securities laws.
It’s anticipated that many other crypto companies facing lawsuits from the regulator would mention this decision in their separate dismissal motions, even though the SEC is now seeking an appeal of this ruling.
The SEC lost a significant amount of funds to Grayscale on August 29 as a result of the earlier denial of its request to turn its over-the-counter Bitcoin Trust into a Bitcoin Exchange Traded Fund (ETF). The judge stated unequivocally that the SEC’s denial of Grayscale’s motion was “arbitrary and capricious.”
