SEC chair Gary Gensler said it is time for firms facilitating crypto transactions to register with the Securities and Exchange Commission — but indicated he is open to the view that some cryptocurrencies are commodities that should be regulated elsewhere.
Speaking to a conference of attorneys, Gensler made clear his view that most crypto tokens are securities that fall under the SEC's jurisdiction. The SEC's oversight role "should not change just because the issuance and trading of certain securities is based on a new technology," he said.
"Some in the crypto industry have called for greater 'guidance' with respect to crypto tokens," Gensler said. "Not liking the message isn’t the same thing as not receiving it."
The SEC has asserted through legal actions that the XRP cryptocurrency and several tokens offered by Coinbase are securities — prompting a rebuke from some within the crypto industry that the SEC is regulating by enforcement rather than creating new rules that clarify the status of crypto. Gensler countered that point Thursday by stating that most crypto tokens qualify as securities under the Howey test established by a 1946 Supreme Court ruling.
"Given that many crypto tokens are securities, it follows that many crypto intermediaries are transacting in securities and have to register with the SEC in some capacity," Gensler said.
Those intermediaries include broker-dealers, custodians and lenders. "If you fall into any of these buckets, come in, talk to us and register," Gensler said.
Bitcoin, he acknowledged, may be an exception. Next week a Senate committee will hold a hearing on a bill that would declare both bitcoin and ether as commodities, under the purview of the Commodity Futures Trading Commission.
"To the extent the Commodity Futures Trading Commission needs greater authorities with which to oversee and regulate crypto non-security tokens and related intermediaries, I look forward to working with Congress to achieve that goal," Gensler said.
But he added that any action from Congress should maintain "the robust authorities we currently have."
"Let’s ensure that we don’t inadvertently undermine securities laws underlying $100 trillion capital markets," Gensler said. "The securities laws have made our capital markets the envy of the world."