SEC Chair Threatens Action Against Unregistered Crypto Exchanges

U.S. Securities and Exchange Commission chair Gary Gensler has fired another warning shot at cryptocurrency industry leaders.

Testifying before a congressional subcommittee Wednesday, Gensler said, “The crypto exchanges should come in and register or, frankly, we’re going to continue to bring, use what Congress has given us, in our enforcement and examination functions.”

To date, the SEC has brought over 80 enforcement actions against crypto asset offerings and platforms.

“I think the rules are actually quite clear that if you’re raising money from the public, and the public anticipates a profit based on the efforts of that sponsor, that’s a security," Gensler said.

The SEC has not clarified which crypto assets it classifies as securities, versus some that it has said could be considered commodities. In the same congressional session, Gensler referred to Bitcoin as a commodity:

“Bitcoin, maybe that’s a commodity token.”

Due to the unclear take on crypto assets, many crypto firms fined or subpoenaed by the SEC have raised concerns that even after doing their best to follow poorly articulated laws only to later face legal repercussions.

To come to a middle ground, Gensler stated last month his desire to create a novel registration and regulation process for crypto overseen by both the SEC and the Commodities Future Trading Commission (CFTC).

Speaking at the Congress hearing, Gensler further said that more resources were needed to adequately regulate crypto: “I wish we had more to be able to dedicate to this. ... We’re really out-personed.”

Earlier this month, the SEC announced it was nearly double sizing its newly rebranded Crypto Assets and Cyber Unit.

Gensler said additional resources would be required to protect crypto consumers from unprecedented risk, alluding to the stunning collapse last week of Terra’s algorithmic stablecoin, UST, and native token, LUNA.

“There was one crypto complex that went from like $50 billion to near-zero just within the last three weeks,” warned Gensler.

“These are highly speculative, volatile, and—I would daresay often—the public is not protected.”