Gensler brushes aside exchange protests and justifies his action

The battle rages on between the Securities and Exchange Commission (SEC) and crypto exchanges. Binance and its president have been directly targeted by the SEC. In response to Binance’s accusations of “aggressive and intimidating tactics“, SEC Director Gary Gensler has hit back, accusing the exchanges of deliberately ignoring risks in favor of their economic interests.

The regulator’s position leaves little room for compromise. Gensler was firm in a speech delivered at the Piper Sandler Global Exchange & FinTech conference. He warned against statements made by crypto-asset market players on social networks or on television, claiming that they had not been warned that their activities might be illegal. In his view, these statements are not credible.

Gensler even criticizes these companies, including Coinbase, for their cynicism. In his view, they were motivated primarily by financial interests, and made an economically calculated decision. According to this logic, legal risk is simply a market parameter in the industry equation.

Gensler’s proposed solution for crypto platforms is to register with the SEC. However, platforms feel this is too complicated. Gensler reacts by saying he disagrees with the idea that compliance for crypto-currency intermediaries is impossible. In his view, recent history belies this assertion.

Nevertheless, compliance will require effort and constraint. Gensler acknowledges that it will require work, but remains adamant that certain tokens should not be classified as securities.

He points out that even if some crypto asset security promoters argue that their token has a broader purpose than simply being an investment vehicle, this doesn’t change the fact that these tokens remain investment contracts. According to him, the investing public generally buys these cryptos anticipating a profit based on the efforts of the token issuers.