Today, in his opening statement before the United States House of Representatives Committee on Financial Services, SEC Chair Gary Gensler reaffirmed the SEC’s aggressive approach toward crypto compliance. In particular, Chair Gensler reemphasized the Commission’s position that the vast majority of crypto tokens are securities, thus crypto intermediaries are transacting in securities and must register with the SEC. “It’s the law; it’s not a choice,” said Chair Gensler. Conversely, when pressed by Committee Chairman Patrick McHenry to declare Ether either a commodity or a security, Chair Gensler declined and refused to acknowledge the lack of clarity in the marketplace around how Ether should be regulated.
Chair Gensler also highlighted a number of the Commission’s recent rule proposals that would apply to all securities, including crypto asset securities. For example, in December, the SEC proposed the best execution rule that, if adopted, would help ensure that brokers have policies and procedures to seek the best execution for investors when trading securities, including crypto security tokens. Similarly, in February, the SEC proposed updates to the investment adviser custody rule to cover all crypto assets in order to enhance the protections that qualified custodians provide. And, most recently, the SEC reopened the comment period on proposed amendments to the definition of “exchange” under Exchange Act Rule 3b-16. Concurrent with the reopening, the SEC reiterated the applicability of existing rules to platforms that trade crypto asset securities, including DeFi platforms, and requested information and public comment on crypto asset securities trading on such platforms. “Make no mistake,” said Chair Gensler in a press release announcing the reopening of the comment period, “many crypto trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws.”
You can read Chair Gensler’s full remarks before the House Financial Services Committee on the SEC's website.