The SEC has crypto in the crosshairs
The Future. SEC chairman Gary Gensler has come in hot on crypto since taking the post in April 2021 — opening several investigations, issuing huge fines, and moving to establish most cryptos as securities (like stocks or other investment products). The crypto industry is against that classification… but an upcoming ruling in the SEC’s lawsuit against exchange Ripple could give Gensler the power he needs to make that an indisputable reality.
When it comes to “the Wild West” of crypto (Gensler’s words), the US government has a sheriff trying to wrangle in the excesses.
- He’s doubled the crypto enforcement team to 50 members.
- He’s fined several crypto exchanges and lenders — BlockFi, LBRY, and Ripple — for insufficient reporting and other registration failures.
- Some of those fines have reached $100 million, showing that SEC definitely means business.
- It’s also currently investigating big players like Coinbase and FTX (even before its stunning downfall).
Gensler’s regulatory theory is that the vast majority of cryptocurrencies are securities, which the Supreme Court-created “Howey Test” dubs anything that offers customers a “chance to invest in a ‘common enterprise’ with the expectation of profiting from the efforts of others.” That requires a lot more government scrutiny and financial disclosures.
The crypto industry may hate him, but Gensler is actually no crypto-hater. He taught a course at MIT called “Blockchain and Money,” has immense respect for Bitcoin’s creator, Satoshi Nakamoto, and was even praised by crypto-happy VCs when he took the SEC post.
Speaking of Bitcoin, Gensler doesn’t believe that it’s a security because “no central group or individual controls it.” Ether, on the other hand… watch out.