In recent testimony, SEC Chairman Gary Gensler criticized the state of cryptocurrency compliance and expressed concerns over stablecoin regulation. "I've been in and around finance for 40 years and I've never seen a field that is so non-compliant with securities laws," he said.
When asked by Rep. French Hill about drafting legislation on stablecoins, Gensler emphasized the importance of not undermining money markets and ensuring proper enforcement against fraud and manipulation.
He also confirmed that if a cryptocurrency token is considered a security, any exchange trading such tokens would need to register as a national securities exchange.
During the hearing, Gensler fielded questions on various topics, including the SEC's ongoing efforts to close the "street name" loophole that allows companies to hide behind the façade of private ownership despite having more than 2,000 beneficial owners. He informed Rep. Brad Sherman that he has directed SEC staff to address this issue and propose a solution.Sherman also proposed a legislative change that would explicitly recognize cryptocurrencies as securities. This would help clarify the regulatory framework surrounding digital assets and ensure that exchanges trading these tokens would need to register as national securities exchanges.
In addition, the SEC boss discussed the implications of including custodied crypto assets on bank balance sheets with Rep. Andy Barr, asserting that this measure is crucial for investor protection, particularly in cases of bankruptcy. He noted that the SEC had consulted with bank regulators and accounting firms on this matter, emphasizing the need for collaboration among various regulatory bodies.