Despite recent court defeats, the United States Securities and Exchange Commission (SEC) Chair Gary Gensler remains adamant that his agency should be the one to regulate crypto assets. He will express his views on this matter on September 12 during a Senate Banking Committee hearing on the SEC’s oversight of certain matters. Gensler’s prepared testimony states that the industry’s wide-ranging noncompliance with the securities laws is reminiscent of the 1920s before the federal securities laws were in place.
Gensler believes that almost all crypto assets meet the criteria for the Howey Test, which determines whether an asset or transaction can be classified as a security. He further asserted that most crypto intermediaries must comply with the securities laws.
The SEC experienced its first major legal loss on July 13 when Judge Analisa Torres ruled that the sale of XRP to retail consumers was not in violation of federal securities laws. Many other crypto firms facing lawsuits from the regulator have referenced this decision in the dismissal motions they submitted.
On August 29, the SEC suffered its second major defeat when Judge rejected its application to convert Grayscale Bitcoin Trust into a Bitcoin Exchange Traded Fund (ETF), declaring the SEC’s rejection was “arbitrary and capricious”.
LBRY, which was convicted for violating securities laws earlier this year, has made an appeal to the public following high-profile financial losses. The company has filed a notice to appeal the court’s ruling and is fighting against the ruling.
The SEC has experienced many setbacks in the past two months, but Gensler is determined to ensure that crypto assets are regulated by his agency.