Sorry crypto bros, Gary Gensler is right

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On April 18, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler appeared in the latest House Financial Services Committee hearing, the first of its kind in 18 months.

Gensler remained cool, calm and collected even as he was subjected to a barrage of criticism, mostly from the GOP side, for refusing to budge on his stance that existing securities laws apply to the digital currency industry.

In a flood of somewhat conflicting complaints, Gensler was criticized for not being clear about regulations and going too far too quickly. Yet even in the eye of the storm, the SEC Chairman patiently reiterated his long-held position that existing financial regulations and existing laws created by Congress apply and always have. While many industry outlets portrayed him as confused and out of touch, truth be told, he was anything but and remained unwavering throughout.

After the hearing, digital currency influencers complained on Twitter about Gensler, and Rep. Warren Davidson (R-OH) even went so far as to call for Gensler’s removal as SEC Chairman. .

This is yet another example of the overreactions all too common within the industry when told that the laws and rules of a Democratic nation apply to them.

Gary Gensler is such a little female dog

Tiffany Fong (@TiffanyFong_) April 19, 2023

Great points, well reasoned and highly logical, Tiffany!

Gensler is right, and the crypto bros are wrong

To anyone half-educated or sane, it’s no big surprise that the head of the SEC is right about securities laws, while the ideological zealots who fundamentally misunderstand Bitcoin are wrong. Yet here we are.

When new industries emerge, it is always true that regulators must strike the right balance between innovation and customer protection. However, this does not mean that governments should compromise on enforcing existing laws when new industries violate them.

Whether Gensler is right that most digital currencies are securities remains to be seen and will be settled in court, but using the Howey test, it’s hard to see where he is wrong. Either way, he’s right that regulations and restrictions protect customers from bad actors in the industry; just look at how Japanese rules have helped protect the citizens of that country from the fallout of FTX.

Speaking of Japan, the rules in that country clearly illustrate how industry players are not at all honest when advocating for regulatory clarity. Not only has Gensler been 100% consistent and clear that existing rules apply from day one of his presidency, but exchanges like Coinbase (NASDAQ:COIN) have pulled out of Japan, which has perfectly clear regulations. .

What these digital currency exchange bosses really mean is that they want favorable regulations that allow them to sell unregistered securities to the unsuspecting public as they pump and dump them on speculators. naïve people who have bought into the idea that they are part of a financial revolution. To Gensler’s credit, his words and deeds show that it won’t happen on his watch.

Whether or not digital currency exchange bosses like Brian Armstrong and Jesse Powell like it, they will have to play within the laws of the nations they operate in, and where they have broken them, they will have to pay the piper.

All the complaints and dishonest calls are just tactics to delay the inevitable collision with the regulation meteorite heading their way. All the lobbying dollars they pumped into the pockets of morally flexible congressmen and senators are unlikely to save them.

Follow CoinGeeks Crypto Crime Cartelseries, which dives into the stream of groups from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple, Ethereum, FTX and Tether that co-opted the digital asset revolution and transformed the industry into a field of mines for nave (and even experienced) market players.

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