• SEC Chair Gary Gensler recently defended the agency’s lawsuits against Binance and Coinbase for failing to register and comply with securities laws.
• Gensler dismissed claims from exchanges that they lacked “fair notice” that their conduct could be illegal, claiming it was a “calculated economic decision” not to comply.
• He suggested some exchanges sought meetings with the agency but were unwilling to make the necessary changes to comply, stressing crypto compliance is possible but takes work.
SEC Cracks Down on Crypto Exchanges
The Securities and Exchange Commission (SEC) recently cracked down on crypto exchanges, such as Binance and Coinbase, for failing to register and comply with securities laws. This has significant implications for crypto intermediaries and the broader crypto market.
SEC Chair Defends Crackdown
SEC Chair Gary Gensler defended the crackdown in his speech at the Piper Sandler Global Exchange & Fintech Conference on June 8, 2023. He criticized these exchanges for depriving investors of critical protections by not registering and complying with securities laws. He dismissed claims from exchanges that they lacked “fair notice” that their conduct could be illegal, claiming it was a “calculated economic decision” not to comply.
Exchanges Were Warned
Gensler also addressed claims by Coinbase and Robinhood that they tried to comply with the SEC but failed, stressing it is possible if one puts in enough effort. To back up his statement, he cited leaked chat logs from a former Binance Compliance Lead stating: “We are operating as a fking unlicensed securities exchange in the USA bro.“
Gensler’s Views on Crypto Assets
Gensler highlighted the need for crypto security issuers to register their investment contracts as most assets are securities due to their value depending on third-party efforts alone. As such, he believes participants should know better than engage in illegal activities as there will always be consequences even if one may not have received enough warning initially.
Implications of Gensler’s Stance
The future of crypto regulation under Gensler’s leadership could reshape the entire landscape which would have far-reaching implications for businesses operating within this space. This recent crackdown serves as yet another reminder of how important it is for companies dealing with cryptocurrencies or blockchain technology to stay compliant in order to avoid any unwanted entanglements with regulators or law enforcement agencies down the line.