Gary Gensler on crypto ban

SEC can’t impose a blanket ban on crypto but congress could, says Gary Gensler

The Securities and Exchange Commission (SEC) chairman, Gary Gensler, said banning cryptocurrencies doesn’t fall within the commission’s jurisdiction. Instead, the power lies with Congress, adding most digital currencies qualify as a form of security.

Gensler expressed the views on Tuesday at a discussion with the House of Representatives on matters of financial services after legislator Ted Budd asked Gensler whether the commission will go the China way when imposing a crypto ban. 

“No. I mean, that would be up to Congress,” Gensler said. 

The SEC chairman further added that many digital currencies already passed the investment contract tests, and qualify as a form of security “that we bring them within the investor protection remit of the commission (SEC)”. 

SEC’s crypto approach is different 

The crypto industry’s greatest concern, for a long time, has been the US government casting a blanket ban on all digital currencies. And these concerns are valid judging from the government’s 1933 blanket gold ban. 

In a previous statement, Gensler suggested crypto exchanges should register with SEC as most virtual currencies and products are [actual] securities. 

Recently, the People’s Bank of China deemed all digital currencies (including crypto payments and transactions) illegal. According to analysts, the move was in line with China’s central bank’s tough stance on virtual currencies. 

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Speaking to the House Financial Services Committee, Gensler noted that SEC’s approach toward crypto won’t go the China way. “Our approach is quite different”. 

He said the commission is looking for proper ways to ensure the crypto industry protects investors. And complies with tax and anti-money laundering laws. Gensler added that he’ll discuss security issues Stablecoins are likely to pose in the future. 

US Central Bank unlikely to impose a crypto ban 

Gensler’s statements echo those of Jerome Powell, the Federal Reserve chairman. Powell recently observed that the US Central Bank doesn’t intend to ban digital currencies. 

But Patrick McHenry, a House Representative, questioned Gensler on the commission’s tough stance on digital currencies. McHenry accused the SEC chairman of being unclear on what constitutes a virtual asset. 

McHenry said some comments from Gensler evoke questions in the crypto markets and make things even more unclear.  

“[Gensler] makes seemingly off-the-cuff remarks that move markets, you’ve disregarded rule-making by putting a statement out without due process, and you’ve essentially run roughshod over American investors”. 

McHenry further asked the SEC chairman if he has reviewed the safe harbor proposal prepared by Hester Pierce, SEC commissioner.  

Gensler replied saying he and the commissioner already shared thoughts about creating a potential safe harbor. And thinks the challenge is to create oversights and protect consumers because without them, “people are going to get hurt”.