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Responding to Blockchain Association Criticism
U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler also talked about crypto assets (virtual currencies) during a post-meeting media address on Thursday about broker-dealer and other regulations.
“The law is clear,” Gensler said after the Blockchain Association criticized him for not giving a “fair evaluation” of the crypto industry.
I, along with my fellow Commissioners in the SEC, pledge to enforce the laws passed by Congress and interpreted by the courts.
Ultimately, it is important to protect public investors and to scrutinize the facts and circumstances surrounding individual tokens and various platforms.
Mr. Gensler and others are trying to dodge criticism that they are complying with the law. The phrase “passed by Congress, interpreted by courts” seems to refer to securities law and the Howie test’s interpretation of securitization.
connection: Chairman Gensler Claims “SEC Has Already Provided Regulatory Guidelines”
What is a howie test
A test that determines whether a particular transaction falls under one of the securities trading definitions of an “investment contract” in the United States. Derived from the SEC’s lawsuit against WJ Howey. Although this itself is not legally binding, the SEC has taken legal action against multiple ICOs (token sales) based on this test.
Cryptocurrency Glossary
Gensler reiterated his concerns about the cryptocurrency industry.
The virtual currency exchange provides various services, but it emphasizes the recognition that conflicts of interest may occur due to them. It also claims to be one of the rationales for the lawsuit against Coinbase. Gensler commented:
Virtual currency exchanges can conduct transactions that are against the interests of their customers. That means they may be doing market making in a way that the New York Stock Exchange and Nasdaq don’t.
Gensler said cryptocurrency platforms also “do not have enough risk oversight” for wash trading, a form of market manipulation.
What is wash trade
Transactions that do not aim to transfer rights, such as placing orders for both buying and selling of the same asset by the same person for the purpose of soliciting transactions.
Cryptocurrency Glossary
Criticism that “Chairman Gensler should step down”
On June 29th, the Blockchain Association, a US virtual currency industry group, released a document criticizing SEC Chairman Gensler. Gensler argues that we must back away from any enforcement decisions that are premised on the theory that cryptocurrencies are securities.
Blockchain Association Chief Policy Officer Jake Chervinsky said:
It is clear that Chairman Gensler cannot give a fair assessment of the cryptocurrency industry. Gensler is adamant that all cryptocurrencies other than Bitcoin (BTC) are securities.
This means that the SEC cannot make fair enforcement decisions through the Wells Process and federal law that it must follow. Gensler should step aside from all legal enforcement decisions related to cryptocurrencies.
Czervinski added that if Gensler refuses, those subject to SEC enforcement will raise the issue of Gensler’s resignation.
The Wells Process is a procedure for conducting fact-finding investigations into securities law violations and providing the parties with an opportunity for a fair hearing.
connection: US Congressman submits bill to reorganize SEC and remove Chairman Gensler
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