SEC Chair Gary Gensler Says TradFi Could Be Undermined By Lummis-Gillibrand Crypto Bill

On June 14, Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), showed his concerns saying that the new crypto legislation could undermine current broader market regulations.

The reaction of the policymakers didn’t come as a surprise as they have put in efforts for his agency to control crypto and give the majority of assets the same treatment as securities.

On June 7, Senators Cynthia Lummis and Kirsten Gillibrand introduced the bill regarding the new regulations, in which they proposed that the CFTC should be the industry’s primary regulator. Industry executives and pro-innovation policymakers supported this as it would result in many assets being classified as commodities such as gold rather than securities like stocks of the company.

While speaking at the Wall Street Journal’s CFO Network Summit this week, Gensler said crypto should be treated like traditional banks and financial markets.

Gensler said they don’t want the protections to be undermined in a $100 trillion capital market. “Like behaviors should have like treatment,” he added.

While commenting on the recent steep dips in the prices of cryptocurrencies, he said the urgency has always been there; it’s just have been highlighted with the recent dip in the market.

The purpose of the Lummis-Gillibrand bill is to devise a complete regulatory framework for crypto assets which would be headed by the CFTC. But it is highly unlikely that the bill would pass Congress due to the presence of several anti-crypto lawmakers like Senator Elizabeth Warren.

The bill also aims to introduce new concepts to the nearly 90-year-old securities laws. As a result, some token issuers will have more leeway than public corporations face.

Gensler added that the agency was not trying to extend its jurisdiction but stayed affirmed on its stance that cryptocurrencies are securities. Further stating that the public will be offered these tokens, and the public hopes for a better future, calling it the characteristic of the investment contract.

Rostin Behnam, the chief at CFTC, also gave approval to the Lummis-Gillibrand bill commenting last week that it addresses the distinction quite well in deciphering between a commodity and security.

On June 13, Stu Alderoty, the general counsel at Ripple, criticized the SEC put allegations on the agency of bullying, bulldozing, and bankrupting crypto innovation in the U.S. via enforcement actions, threats, and trying to expand its jurisdiction.

The general counsel further alleged that the SEC wants to keep them in the dark, so they argue that every crypto is security.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing