Gensler believes crypto is more likely a store of value than a functional currency.
SEC stresses stricter enforcement of existing crypto regulations.
SEC targets fraud and market manipulation in crypto with recent settlements.
Gary Gensler has suggested that cryptocurrencies are not likely to become widely used as a mainstream form of currency. Addressing the audience at the New York University School of Law, Gensler stressed that cryptocurrencies are more inclined to function as assets for storing value rather than being used for transactions.
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He clarified that the usefulness of digital assets would ultimately be decided by public investors through disclosures.
According to Gensler, the SEC's approach is merit neutral, meaning the agency is focused on ensuring that cryptocurrencies meet the legal framework, such as the Howey Test. He pointed out that while many in the industry ignore current regulations, the law applies regardless of industry acknowledgment.
Regulation and the Howey Test
At the event, Gensler talked of the Howey Test which is used to assess if an asset is a security. He stated his belief that it is still crucial in the crypto space. Gensler emphasized that transparency is crucial, particularly given the rising losses from cryptocurrency scams. Crypto-related fraud losses have increased by 45% since 2022, as per data from the SEC.
He argued that regulatory frameworks already exist and should be applied to digital assets. Furthermore, he dismissed the idea that the industry needs a separate set of rules, stating that existing regulations are clear.
Gary Gensler Market Manipulation Concerns
Jorge G. Tenreiro, who is currently serving as the head of the SEC's Crypto Asset and Cyber Unit within the Division of Enforcement, voiced worries about manipulation in crypto markets. He emphasized that bad actors are still exploiting the lack of supervision, resulting in substantial financial losses for investors. Tenreiro restated the SEC's dedication to fighting fraud and guaranteeing transparency in cryptocurrency markets.
Tenreiro also pointed out recent SEC enforcement measures involving Truecoin, TrustToken, Mango DAO, and Blockworks Foundation. He observed that these organizations misrepresented their actions to shareholders, putting them at risk of unknown dangers. The companies reached a settlement, with total payments exceeding $1 million.
The post Gensler Claims Crypto Unlikely to Replace Traditional Money as SEC Increases Regulatory Oversight appeared first on Crypto News Land.
