Bitcoin may fall outside the SEC’s oversight says Gary Gensler

SEC Chairman Gary Gensler discussed Bitcoin, the political ramifications of the FTX collapse and the future of crypto regulation in a recent interview. This comes as the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) await a decision on who will have the authority to regulate specific crypto products.

“I love the CFTC,” former CFTC chairman and current SEC chief Gary Gensler told New York Magazine. “You’re not going to get me to say anything negative about.”

However, Gary Gensler believes the SEC has all the legal resources to oversee the sector. US SEC cracks down on web3 companies by enforcing strict rules. Still, enforcement is happening even though Congress still needs to pass crypto legislation.

No “security” registration for Bitcoin

According to Gensler, the “road” or “runway” for cryptocurrency companies not listed with the SEC is “getting shorter.”

Gensler also argues that the structure of up-and-coming crypto companies makes it difficult to regulate them in the US jurisdiction. He noted: “Anything but Bitcoin, you can find a website, you can find a group of entrepreneurs, they can set up their legal entities in an offshore tax haven, they can have a foundation, they can lawyer it up to try to arbitrage and make it difficult jurisdictionally or so on.”

Gensler has also previously claimed that Bitcoin is the only crypto that can be labeled as a commodity. An argument that the CFTC’s Rostin Behnam has accepted to establish the agency’s jurisdiction over the virtual assets.

In capital letters, Bitcoin is the world’s largest crypto. And it is often classified as a commodity. Considering that it has no “centralized” institution that controls price, demand and supply.

Conversely, the SEC chairman has repeatedly argued that since many cryptocurrency initiatives meet the criteria for securities, the agency should register them. An argument many Republican members of Congress have criticized. But he again brought up related points around foreign tokens during the call. He noted, “these tokens are securities because there is a group in the middle and the public expects profits based on that group.”

In response, attorney Logan Bolinger stated that Gensler’s view of what constitutes a security is not legally binding.

SEC chief sees most crypto tokens failing

The founder of Think Bitcoin also states that while the SEC can file enforcement actions and reach agreements, these things do not establish legal precedents. As a result, counsel stated that companies or individuals could choose to proceed to trial. Where the SEC had to demonstrate to the judge that a particular product was a security. Bolinger added, “Important to keep in mind that, in theory, the Howey Test could also be overridden. Alternatively, the Securities Act of 1933 could be amended. New laws could be written. Etc.”

Meanwhile, Gensler argued that many of them combine roles that would typically be shared between exchanges, lenders, custodians, etc. According to Gensler, conventionally regulated markets must formally separate these roles.

“The conflicts in these storefronts,” Gensler told the media, “we don’t allow traditional finance, we don’t allow in securities markets, we don’t allow in commercial banking markets, and we don’t allow allow in crypto because these storefronts are fundamentally and generally not in compliance with the securities laws as we know them.”

In addition, the head of the securities agency believes that most of these tokens would fail due to the larger economy of micro-currency. But without legislative action, crypto’s status in the US remains unclear.

Due to the lack of specific legislation, the United States treats cryptocurrency as property along with several other nations. US lawmakers are still debating federal regulatory structures for cryptocurrencies in Congress.

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