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The president of the US SEC emphasizes that cryptocurrency projects that raise funds are subject to security laws

  • The Chairman of the SEC has stated that any project that raises money from the public must follow security laws.
  • Gary Gensler said he is not opposed to innovation in the cryptocurrency space.

The U.S. Securities and Exchange Commission (SEC) has not yet clearly defined which cryptocurrency projects are subject to security laws. However, during his recent interview with CNBC, SEC Chairman Gary Gensler said that any cryptocurrency project that raises money from the public must be registered with the SEC. Therefore, the cryptocurrency tokens sent as part of it will be treated as securities.

Speaking on CNBC’s Squawk Box show, the chairman of the SEC spoke about regulatory compliance in the cryptocurrency space. Gary Gensler’s response came when he was asked about ConstitutionDAO, a project that sought to purchase a copy of the U.S. Constitution through crowdfunding cryptocurrency.

However, the chairman of the SEC declined to comment on whether (ETH) qualifies as a security or not. He said:

I will not comment on any project. But you have an important point raised. Crypto tokens, as they are called, are raising money from the public. And are they sharing the same layer of exposure with the public that helps the public make decisions and are they adhering to the truth in advertising?

In addition, Gensler noted that what he considers to be the most missing for the cryptocurrency industry to comply with securities laws is full disclosure of information.

The SEC chairman is not against crypto innovation

SEC Chairman Gary Gensler said he has no objection to the ongoing innovation in the cryptocurrency space. However, he believes that it should not happen outside the realm of regulation. Gensler said:

There are thousands of these projects that are basically trying to raise money from the public to support a business idea. That part is fine. It is called innovation. But the point is to introduce it into the laws of values.

In addition, he said many cryptocurrency projects will argue that they are not securities, but «the facts and circumstances indicate that they are investment contracts, that they are securities, and must be registered.»

When it comes to regulating the crypto space, Gensler’s position is not new. In fact, the chairman of the SEC recently called on the US Congress to give the SEC more regulatory oversight to deal with developments in the cryptocurrency space.

The SEC is also in a legal battle with San Francisco-based blockchain startup Ripple over the alleged use of crypto XRP as securities. The year – round battle will finally come to an end, just as many market analysts expect.

Most likely, the SEC will work closely with other regulators to bring more clarity to cryptocurrency market regulations.

Jean Simmons

Jean Simmons has been a cryptocurrency enthusiast since 2014 and has been dedicated to the topic on a daily basis since she first learned about Bitcoin and blockchain technology. Besides cryptocurrency, Jean studied computer science and worked for two years at a blockchain startup. At Mercayala, he is responsible for technical issues. His goal is to bring cryptocurrencies to the world in a simple and understandable way.

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