JUST IN: The crypto industry is just fine with the securities laws – SEC Chair Gensler

• The SEC Chair, Gary Gensler, asks crypto exchanges and other service providers to abide by existing securities laws.
• The SEC is a market cop, but it works with market participants to resolve issues, according to Gensler's Thursday speech.
• Stablecoins may be securities, but Gensler and the Federal Reserve and the US Treasury Department will provide guidance on the issue.

According to the Securities and Exchange Commission (SEC) Chair Gary Gensler, the cryptocurrency market does not need special treatment. In a speech on Thursday, he intimated that sundry crypto actors run exchanges, brokerages, and clearing firms and provide custodial services. All these activities are compatible with the securities laws – which prioritize investor protection.

"Nothing about the crypto markets is incompatible with the securities laws," Gensler said. Investor protection is just as relevant, regardless of underlying technologies, Gensler reckoned.

Crypto tokens do not need clearer guidance

Mr. Gensler reiterated the commission's stance over the last five years that existing securities laws are widely applicable in the crypto space. He echoed the sentiment of the former SEC Chair, Jay Clayton, that crypto tokens can operate within the guidelines provided by the Commodity Futures Trading Commission (CFTC).

However, Gensler signaled the need to have Congress hand over many of the issues pertaining to some cryptocurrencies, such as Bitcoin. He added that he was ready to collaborate with Congress to divulge more power to the CFTC.

"[The public is] investing for a better future, based upon the efforts of others. There are websites you go to; there are Medium posts that you read; there's crypto Twitter. There are Reddit forums and places you can look for information.

And it's about that common enterprise and that entrepreneurial effort, which is the hallmark of investment contracts, which are securities," Gensler told CoinDesk in an interview before his speech.

Read more: Cryptocurrencies Price Prediction: Bitcoin, Cardano and Polygon – European Wrap 8 September

No honest business should fear the SEC

Gensler took a swipe at intermediaries in the cryptocurrencies – both centralized and decentralized platforms saying that their activities, contrary to what they are portrayed to be – are very much similar to the rest of the securities markets. All service providers, including crypto exchanges and lending platforms, should abide by regulations designed to protect their users.

Cryptocurrency exchanges do not need to fear the SEC as long as they work within set guidelines. Gensler said that the mandate of the SEC is that of "a cop on the beat," but the regulator often works with market participants.

Read more: Bitcoin Price: Whales flood exchanges with BTC, what's next?

Stablecoins may be securities – Gensler

Zeroing in on stablecoins, Gensler echoed the SEC's stance that they are assets already operating under the existing securities laws. It is worth noting that stablecoins refer to cryptocurrencies whose value is tied to another asset, like a real-world currency or a basket of different assets.

Gensler outlined in his speech that "stablecoins may be securities, depending on how their peg is maintained, whether they pay interest and how they're sold." He added that it was essential to examine "the facts and circumstances of a product, not its label, to determine whether it is a crypto security token, a crypto non-security token, or another instrument."

Investor protection was the highlight of Gensler's speech. He said the body intends to work with the Federal Reserve and the U.S. Treasury Department to provide more guidance on the issue. The SEC hopes to build trust in all these markets while prioritizing the investor.

Regulation has been a volatile topic in the cryptocurrency industry. Industry stakeholders and innovators believe that regulators are not doing enough to put the matter to bed.

Ripple Labs, a blockchain company issuing the token XRP, is battling in court with the SEC amid allegations of securities laws breach. According to Gensler's speech, the crypto industry should stop waiting for more 'guidance' and abide by existing rules.

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