- Gensler said that crypto markets in general are not compliant
- He also answered a number of questions
Securities and Exchange Commission (SEC) Chairman Gary Gensler, attended at the 27th Annual Financial Markets Conference. He was asked about the dispute with Coinbase, the rules for the cryptocurrency market, and the state of the crypto economy in general.
Gensler stated that he believes crypto markets are generally inadequate and based on a false notion of decentralization.
“Their business models, however, tend to be built on non-compliance. They are usually built on client funds, mixing them, they are full of conflicts. By comparison, the SEC would never allow the New York Stock Exchange to operate the way crypto platforms operate.”
He also noted that three of the last four U.S. bank failures were related to cryptocurrencies. Gensler said that the more interconnected the worlds of traditional finance and cryptocurrencies become, the more likely it is that “financial market fires” will occur.
The President and CEO of the Federal Reserve Bank of Richmond, Tom Barkin, asked him to comment on the dispute with Coinbase. He asked: “Why doesn’t the SEC want to publish rules for this market?”. Gensler replied:
“Because the rules have already been published, this area does not work in accordance with the requirements. Our agency has published rules on what it means to be an exchange, what it means to be a broker-dealer, and how to register an offer of securities. These rules exist, and there is nothing like that in the new technology.”
He also talked about how securities regulation relates to cryptocurrencies, briefly describing the Howey test.
“If the public invests money, in anticipation of profit, based on the efforts of others, in a joint venture, then this is a security, an investment contract”