The Securities and Exchange Commission takes the lead in defining what a security is, not necessarily legislation, the regulator’s Chair Gary Gensler said.
After a House Appropriations Committee hearing on Wednesday, Gensler told reporters that existing securities laws “cover most of the activity that’s happening in the crypto markets.”
“If Congress were to act, though I don’t think we need these authorities, not to undermine inadvertently through definitions of what’s in or out, or in essence allowing for conflicts that we don’t allow,” Gensler said.
“I think there is one agency — the Securities and Exchange Commission, overseen by two committees — the House Financial Services and Senate Banking, and the courts that define what a security is and not individual crypto exchanges selecting that,” Gensler later said.
Lawmakers have introduced legislation over the years to regulate crypto. Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., have plans to reintroduce legislation next month that would, in part, assert that the Commodity Futures Trading Commission has control over digital asset commodities, such as bitcoin.
“I think many of the legislative vehicles would, if adopted, would undermine the securities remit,” Gensler added.
Silence on Binance
The hearing came days after the CFTC sued the world’s largest crypto exchange, Binance, for unregistered trading activity and highlighted some major revelations in its 74-page complaint. Some of those include Binance possibly knowing that it helped facilitate illegal transactions.
Gensler declined to answer whether the agency planned to bring its own actions against Binance, while noting that the agency has brought actions against other exchanges.
Rules already exist
During the House hearing, Gensler also told lawmakers that regulations already exist to govern crypto. “They’re called the securities regulation,” he said.
Gensler reiterated that most cryptocurrencies are securities and said entities overseas that sell to U.S. investors need to come under the securities law.
“If you’re touching U.S. investors, selling these tokens to U.S. investors then you come under either the securities laws” or the laws under the CFTC, Gensler said.
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