Securities and Exchange Commission Chair Gary Gensler held fast to his stance that most cryptocurrencies and crypto firms are subject to federal securities laws ahead of congressional hearing on Wednesday.
Gensler, who is set to testify in front of the House Financial Services Committee, said those securities laws have "been on the books for decades," according to prepared testimony.
"Given this industry’s wide-ranging noncompliance with the securities laws, it's not surprising that we’ve seen many problems in these markets," Gensler said. "We’ve seen this story before. It’s reminiscent of what we had in the 1920s before the federal securities laws were put in place."
Gensler cited the agency’s rulemaking in his testimony, including a release in April that said crypto platforms already are part of the definition of an exchange, including DeFi platforms.
Gensler is likely to face criticism from House Financial Services Committee Chair Patrick McHenry, R-N.C., over his approach to regulating crypto. McHenry accused Gensler in April of not providing clarity on how firms can comply with federal securities laws.
"You’re punishing digital asset firms for allegedly not adhering to the law when they don’t know it will apply to them. That’s nonsensical," McHenry said in April.
On the flip side, some Democrats, such as Rep. Maxine Waters, D-Calif, have sided with Gensler's view and said securities laws can work for crypto firms.
Gensler's testimony comes as lawmakers in the House Financial Services Committee advanced two bills in July. One would overhaul crypto market regulation in part by creating a pathway for a digital asset to transition from being a security to a commodity. Another looks to regulate stablecoins.
Crypto entrepreneurs will by nearby in Washington as Gensler testifies as part of Coinbase's Stand with Crypto Day. They plan to meet with lawmakers and government officials to discuss how crypto is creating jobs in their states, according to a blog post.
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