According to the Chair of the US Securities and Exchange Commission, Gary Gensler, the agency is prepared to assist crypto intermediaries in achieving compliance. Gensler made this statement during his speech at the Atlanta Fed’s 2023 Financial Markets Conference, which followed the increased tension between the regulator and exchanges regarding the process of registering with the agency.
Gensler emphasized that the business models of crypto intermediaries often rely on non-compliance. He added that these models frequently involve commingling customer funds and are plagued by conflicts of interest.
Gensler urged crypto platforms to register with the SEC, categorizing the majority of cryptocurrencies as securities. However, crypto exchanges such as Coinbase resisted this call, asserting that they do not list securities. In March, Coinbase received a Wells Notice from the SEC, indicating that the agency was prepared to recommend formal charges to the commission.
Coinbase argues that the SEC failed to comply with the law by not providing a viable registration pathway for companies. Coinbase’s chief legal officer, Paul Grewal, expressed frustration over the SEC’s lack of response to inquiries about how securities laws might apply to their operations.
Bittrex US, another crypto exchange, filed for bankruptcy after the SEC accused it of running an unregistered security exchange. Bittrex announced the closure of its US operations in early April, citing an uncertain regulatory environment and requesting that customers withdraw their assets.
In July 2022, Coinbase petitioned the SEC to develop regulations for digital assets. However, Gensler rejected this request during his speech, stating that rules for the industry had already been published. He emphasized that the crypto field has largely operated in a non-compliant manner.
