Gary Gensler attributes SEC focus on crypto to financial media and fraud concerns

Last updated: May 7, 2024 at 7:55 p.m. EDT | 2 minutes of reading

Gary Gensler, chairman of the United States Securities and Exchange Commission (SEC), defended the agency’s focus on the crypto industry in an interview on May 7, saying it was not about not from excessive attention but rather a response to the prevalence of scams and fraud within the sector. sector.

Speaking with CNBCGensler pointed out that while crypto represents a small portion of the financial markets, it contributes disproportionately to problems like scams and fraud, attracting significant media attention.

Gary Gensler’s big concern

Gensler pointed out that the financial press is amplifying coverage of crypto-related issues compared to traditional securities markets, leading to an increased perception of the importance of the sector.

“We oversee a $110 trillion capital market. Crypto is only a small part of our overall markets, but it’s an outsized part of the scams, frauds and problems in our markets,” Gensler said.

He noted that the volume of questions from journalists regarding crypto relative to its market capitalization reflects this increased attention from the media.

The SEC’s crypto enforcement actions have increased, with 46 crypto-related enforcement actions launched last year, marking an increase from previous years.

“You end up with an inordinate ration of questions from journalists… relative to market capitalization; it also depends on the direction of the financial media,” he said.

However, according to analyzes by Cornerstone Research and the law firm Gibson Dunn, these actions are a fraction of the total coercive measures conducted by the SEC, which amounted to 501 last year.

Gary Gensler has always sought transparency

SEC Chairman Gary Gensler highlighted the need for transparency in crypto marketsadvocating for mandatory disclosure to combat circumvention of registration requirements by some industry players.

He cited Supreme Court Justice Louis Brandeis’ famous quote, “It is said that sunlight is the best disinfectant,” to emphasize the importance of transparency.

Gensler’s remarks come amid the SEC’s intensifying efforts to regulate the crypto industry, as evidenced by multiple lawsuits filed against prominent crypto companies and figures such as Sam Bankman-Fried, Binance, his CEO Changpeng Zhao and Coinbase.

These actions reflect Gensler’s position that most cryptocurrencies must be classified as securitiesaligning with the SEC’s regulatory approach.

While the SEC’s scrutiny has sparked calls for more explicit regulatory guidelines to foster innovation in the United States, the agency continues its campaign to potentially classify Ethereum as a security, issuing subpoenas as part of that effort. Gensler stressed the importance of registration requirements to ensure mandatory disclosure, calling it essential to maintaining market integrity.

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