Gensler says centralized regulation is the way forward for crypto

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Gary Gensler Maintains Cryptocurrency Exchanges Must Follow Everyone’s Rules The crypto community, once a Gensler fan, has taken a tougher view of the SEC chief in recent months

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler stood firm on Wednesday, reiterating that cryptocurrency companies and exchanges will no longer be able to operate outside of regulatory oversight.

Gensler was joined by former SEC chairman and current senior policy adviser at Sullivan & Cromwell Jay Clayton at the Digital Asset Compliance & Market Integrity Summit in New York on Wednesday.

Some cryptocurrency exchanges may go unnoticed for now, Gensler said, but those companies will soon have to start operating within the regulatory framework. Cryptocurrency exchanges should be registered with the SEC just like traditional stock exchanges, he insisted.

“If you think there’s a reason why you can’t quite sign up as a full exchange… work with us,” Gensler said. “I think a better path for these platforms, these trading and lending platforms, is to work to be registered in the law.”

Clayton did not disagree, stressing that this new asset class should not, in many cases, be exempt from existing rules.

“Just because you call it a token doesn’t mean it’s not security,” Clayton said.

Welcome cheerleader no more

The crypto community first saw Gensler, who took over from Clayton in April, as a welcome cheerleader for the industry.

Gensler taught a blockchain course at the Massachusetts Institute of Technology and was also co-director of [email protected], a research group that studies disruptive technologies.

However, recent actions by the SEC have led former fans of the crypto industry to take a more severe look at Gensler. Issuers of exchange-traded funds, in particular, have been outspoken in recent weeks after the approval and subsequent launch of the first futures ETFs. Failure to endorse a cash product is inconsistent, some argue.

When asked why a bitcoin spot ETF has yet to be approved, Gensler declined to comment, saying his lawyer advised him not to speak to the outstanding issues. There are currently several ETF bitcoin cash deposits with the SEC.

Gensler’s education is certainly positive, other top speakers agreed, but the conversation around regulation needs to change.

“The hope of having a staff who understands the issues? I think we got that, ”said Ophelia Synder, co-founder and president of 21Shares, during a panel discussion after Gensler and Clayton’s fireside conversation ended. “I think the most interesting conclusion to me from this conversation was the emphasis on centralization as a path to regulation as opposed to finding ways to adapt regulations to a decentralized reality.”

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Casey wagner

Blockworks

Journalist

Casey Wagner is a New York-based business journalist who covers digital assets and macroeconomics. Prior to joining Blockworks, she reported on the markets at Bloomberg News. She graduated from the University of Virginia in Media Studies.

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