Gary Gensler, chairman of the Securities and Exchange Commission, will appear before a Senate committee Tuesday, where he plans to reiterate his belief that many major cryptocurrency exchanges need to register as securities exchanges.
In opening remarks released by the Senate Banking Committee, Gensler says:
"Many platforms have dozens or hundreds of tokens on them. While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50, 100, or 1,000 tokens, any given platform has zero securities. Make no mistake: To the extent that there are securities on these trading platforms, under our laws they have to register with the Commission unless they qualify for an exemption."
Gensler's planned comments echo his previous statements, all of which fit in with his long-term interest in heightening SEC oversight over crypto exchanges.
Spot markets for cryptocurrencies are a critical juncture for current regulation. Gensler has been working with Banking Committee members like Senator Elizabeth Warren to expand the SEC's statutory authority over crypto exchanges.
To this point, Gensler's remarks note: "Right now, large parts of the field of crypto are sitting astride of — not operating within — regulatory frameworks that protect investors and consumers, guard against illicit activity, and ensure for financial stability. "
If crypto assets are commodities, then they fall to the Commodity Futures Trading Commission, which has an enforcement regime for spot markets, but doesn't actively regulate those markets. The SEC, on the other hand, has more stringent reporting requirements for securities exchanges.
Around the same time that Gensler began arguing that crypto exchanges with many tokens were likely to be securities exchanges, former CFTC commissioner Brian Quentenz took to Twitter to say: "Just so we’re all clear here, the SEC has no authority over pure commodities or their trading venues, whether those commodities are wheat, gold, oil….or #crypto assets.” Quintenz is now an advisor to a16z's crypto fund.