The U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler spoke about the FTX collapse, the state of crypto regulation, and its cooperation with international regulators. The SEC Chair has come under fire due to recent events and his connection to the exchange’s former CEO, Sam Bankman Fried (SBF).
Gensler talked with Yahoo Finance following the FTX debacle and accusations about his involvement in supporting SBF to “obtain a regulatory monopoly,” according to U.S. Representative Tom Emmer. The Gensler administration has seen some of the worst blow-ups in the nascent industry.
Interesting. @GaryGensler runs to the media while reports to my office allege he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly. We’re looking into this. https://t.co/SznowgcP6V
— Tom Emmer (@RepTomEmmer) November 10, 2022
FTX And Any Crypto Exchange In The U.S. Must Comply With The Regulations
The SEC Chair published his calendar and meeting with SBF on March 29, 2022. After the crypto exchange went belly-up, these meetings attracted attention.
However, Gensler claims that his duties as SEC Chair force him to meet with all “market participants” and refused to provide further details. During the meeting, the SEC Chair allegedly asked SBF to “come into compliance” with U.S. regulations.
The international branch for the crypto exchange was based in the Bahamas, outside of U.S. jurisdiction. This fact is one of the reasons behind its collapse. As the SEC refuses to implement a clear and robust regulatory framework, companies and investors are forced to get exposure from international companies.
Some market participants asked Gensler to “go lighter” on regulation, but the SEC Chief refused these requests. On several occasions, Gensler intends to classify all cryptocurrencies and digital assets as securities, except for Bitcoin.
Other market participants might consider a different approach, a lighter regulatory framework towards crypto “unfair,” Gensler said. The Commission’s Chairman believes that there are sufficient controls and mechanisms to prevent the collapse of crypto companies such as FTX, Celsius, Three Arrows Capital (3AC), Voyager, BlockFi, and others.
Many in crypto believe the opposite, but Gensler said this about why the SEC failed to prevent FTX from imploding:
(Rules) are in place, over decades, we put them in place, Congress put them in place by laws, this agency, this great agency put them in place through regulation (…).
Addressing the request from U.S. Senator Elizabeth Warren and other politicians to enforce regulations on the crypto industry, Gensler took a defensive stand. The Chief regulator believes the agency is already taking enforcement actions against the nascent sector.
The Commission recently won a case against LBRY, a project accused of launching unregistered security to support its platform. In addition, the regulator launched several probes and is in litigation with payment company Ripple and others for cases of alleged unregistered securities.
The SEC Boss claims their priority is to “protect” investors and the market while maintaining transparency and efficiency. In response to these statements, the team behind LBRY said:
The thing that makes Gary Gensler an absolute psychopath is that he knows the forms required for a registered security (e.g. 10-Q) cannot even be completed for public blockchains. It’s literally impossible. Gensler knows this. And he takes advantage that the media doesn’t.