Securities and Exchange Commission Chairman Gary Gensler warned that several federal agencies overseeing securities could “undermine” market regulation, during a regular Senate Banking Committee oversight hearing of his agency.
“If we end up finding out that there are multiple federal agencies defining what a security is, and another agency is trying to define it, that could undermine what we’re doing,” Gensler said. The SEC Chairman’s comment came as the Senate Agriculture Committee debated a bill to give another U.S. financial markets regulator, the Commodity Futures Trading Commission, more power to designate digital assets as commodities.
The SEC Chairman added that having “a cop on the spot, a regulator” is important when it comes to cryptocurrency.
Gensler’s response came to questions from Senate Banking Committee Chairman Sherrod Brown (D-Ohio) about the coordination of financial market oversight by financial market regulators, with crypto being a particularly sensitive area. The digital assets with the largest market capitalization, bitcoin and ether, are treated more like commodities under the jurisdiction of the CFTC because they are considered sufficiently decentralized, while the SEC considers most crypto tokens to be securities, placing them under stricter disclosure and investor protection. laws. The SEC is reportedly investigating Coinbase for listing unregistered securities on its exchange.
Crypto exchanges and venture capitalists have pushed for the law to be changed or argued that listed tokens are decentralized enough to fall outside securities rules.
In response to further questions from Sen. Pat Toomey (R-Pa.), Gensler noted that the SEC has provided advice on how securities laws apply to crypto projects since 2017 and issued “70 to 80” enforcement orders against crypto companies for failure to follow these laws.
Still, Gensler stressed that his agency works closely with the CFTC on companies that deal in both commodities and securities, and would continue to work with the commission if Congress gave the CFTC greater authority over them. cryptocurrencies.
Brown said his committee would consult with the Senate Agriculture Committee, which has jurisdiction over the CFTC, on the bill Sen. Debbie Stabenow (D-Mich.) has proposed to give the CFTC more power over digital asset markets.
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