Gensler claimed that it was unlikely that crypto could become a currency. He responded to a question on crypto’s value, saying that cryptocurrencies were more likely to be seen as stores of value than forms of payment. Gensler mentioned that the agency was ‘merit neutral’ and crypto needed to pass the Howey Test.
The U.S. SEC chair stated that the public investors would decide ‘through disclosures’ if cryptocurrencies had any utility. Gensler cited 19th-century Gresham’s Law, saying that ‘bad money’ drove away the good. He added that countries just wanted their own currency as units of accounts, mediums of exchange, and value storage.
Gensler wants crypto to show value through utility
Speaking at an NYU School of Law event, Gensler supported the 1940s Supreme Court ruling referring to the Howey Test. He believed that the concept applied to crypto regulation. The U.S. SEC chair said disclosure was necessary, pointing out that losses linked to crypto fraud had surged 45% since 2022.
Just because the crypto industry did not acknowledge existing frameworks did not mean they did; Gensler responded when asked whether creating a regulatory framework for digital assets would be better. He noted that the agency had always been clear about its position, including during the tenure of former chairman Jay Clayton.
“Since then (SEC) has consistently made clear statements with consistent voice as have courts…These things are unlikely to become currencies. They must show their value through disclosure and use.”
-Gary Gensler
Jorge G. Tenreiro, the acting chief of the Division of Enforcement’s Crypto Asset and Cyber Unit (CACU), affirmed that there was concern over the ease with which crypto asset markets were manipulated. He added that there was a commitment to root out such misconduct involving securities. Malicious actors profited at the expense of deceptively lured investors who lost money in these markets.
The SEC remains steadfast behind the push for crypto regulation
According to Gensler, the crypto industry was rife with fraudsters, grifters, and scams, pointing out that many of the crypto industry’s ‘leading lights’ were either awaiting extradition or in jail.
Sanjay Wadhwa, the Deputy Director of the SEC’s Division of Enforcement, asserted that today’s enforcement actions demonstrated that some retail investors were victims of fraudulent activity by institutions in the crypto asset markets. Wadhwa purported that self-anointed market markers were teaming up to target the crypto market investors with false expectations of profits.
On September 24, the U.S. SEC charged Truecoin and TrustToken with defrauding investors regarding a stablecoin investment program. Jorge G. Tenreiro, the acting chief of the SEC’s crypto assets and cyber unit, claimed that both companies sought profits by exposing investors to huge undisclosed risks. He added that the investment’s safety was misrepresented. Truecoin agreed to pay disgorgement with prejudgment interest of $340,930 and $31,538 respectively.
On September 27, the SEC brought charges against Mango DAO and Blockworks Foundation for the unauthorized offer and sale of the MNGO token. Tenreiro said the agency’s views had been that the label ‘DAO’ did not change the reality of the project’s ownership, the activities engaged in, or whether their activities needed registration. The companies settled with a collective $700K payment.
Source: https://www.cryptopolitan.com/gensler-insists-crypto-unlikely-a-currency/