(Kitco News) The crypto market should not be treated any differently than capital markets just because it uses a different technology, according to the U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler.
Gensler described the SEC as "the cop on the beat" in his latest opinion piece published in the Wall Street Journal, titled 'The SEC Treats Crypto Like the Rest of the Capital Markets.'
"There's no reason to treat the crypto market differently from the rest of the capital markets just because it uses a different technology," Gensler wrote.
Gensler compared car manufacturers, who were forced to install seat belts and other basic safety features in 1966 because of the National Traffic and Motor Vehicle Safety Act, to crypto firms.
"Whether a car runs on gasoline or electricity, drivers and passengers deserve to be protected. Similarly, our federal securities laws, which President Franklin D. Roosevelt signed in the depths of the Great Depression, were designed to protect investors," he said.
There’s no reason to treat the crypto market differently from the rest of the capital markets just because it uses a different technology…
— Gary Gensler (@GaryGensler) August 22, 2022
Read my recent Op-Ed:
And the recent crypto crash is another example of why regulation and securities laws are vital to ensure investor protection.
"Across decades of cases, the Supreme Court has made clear that the economic realities of a product—not the labels—determine whether it is a security under the securities laws," Gensler noted. "We can dispense with the idea that crypto lending isn't subject to regulation. On the contrary, the rules have been around for decades."
Gensler pointed out that many platforms are still not following the rules and some even have the "catch us if you can" approach. "There are costs of complying with securities laws, just as there are costs to car makers of adding seat belts," he said.
Gensler also mentioned the recent case of the crypto lending platform BlockFi, which chose to settle the SEC investigation by agreeing to pay $100 million in February.
"That BlockFi had borrowed crypto wasn't the issue here. In fact, you could replace "crypto" with any other asset. The issue was what it did with the borrowed assets and what it didn't do as a firm: provide the required disclosures to investors," Gensler said.
The SEC chair used the opportunity to once again call on all crypto lending firms to come forward and start the conversation with the SEC.
"Getting these platforms into compliance with the securities laws will benefit investors and the crypto market," he said. "In the meantime, the SEC will serve as the cop on the beat. As with seat belts in cars, we need to ensure that investor protections come standard in the crypto market."
Crypto reaction
Billionaire investor Mark Cuban was one of the key figures who called out Gensler's op-ed and the SEC's overall approach to crypto oversight.
Cuban tweeted Monday: "Come in and talk to who? Set up an appointment how? You using Calendly these days? Since you understand crypto lending/finances, why don't you just publish bright line guidelines you would like to see and open it up for comments?"
Come in and talk to who ? Set up an appointment how ? You using Calendly these days ? Since you understand crypto lending/finances, why don't you just publish bright line guidelines you would like to see and open it up for comments ? https://t.co/N3KQAnutl9
— Mark Cuban (@mcuban) August 22, 2022
The Shark Tank star and owner of the NBA's Dallas Mavericks criticized the SEC for its lack of clarity.
"If you were working on behalf of investors, you make it easy for questions by investors and businesspeople to be asked and answered. You make it near impossible. Those can't afford lawyers can only guess," Cuban continued.
This is such Bullshit. You didn't start the BS, pls don't continue it. If you were working on behalf of investors you make it easy for questions by investors and businesspeople to be asked and answered. You make it near impossible. Those can't afford lawyers can only guess. https://t.co/CV7WC5ZmDx
— Mark Cuban (@mcuban) August 23, 2021
