U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler speech Ahead of the 2023 Securities Enforcement Forum, the agency disclosed regulators’ enforcement actions that resulted in $5 billion in judgments and orders. However, Gensler’s mining of the cryptocurrency market became a talking point in the cryptocurrency community on social media, with Gensler stating, “Don’t get me started on cryptocurrency. I won’t even say that we are in this highly non-compliant space. The names of all individuals charged in this.”
When talking about the economic angle of SEC enforcement actions, Gensler noted that the agency filed more than 780 enforcement actions in 2023, including more than 500 separate cases. These enforcement actions resulted in judgments and orders totaling $5 billion, of which $930 million was distributed to harmed investors.
Gensler added that since December 2021, the SEC has prosecuted 40 companies for violating various rules and regulations, resulting in more than $1.5 billion in fines. Gensler revealed that in the past fiscal year alone, the SEC settled record-keeping-related charges with 23 companies.
In his speech, the SEC chairman reiterated his previous stance on cryptocurrencies, claiming that much of the cryptocurrency market falls under the category of securities and therefore must be governed by the same laws. Explaining the broad definition of security, Gensler explained the concept of an “investment contract” and why much of the cryptocurrency market resembles it. Gensler said most cryptocurrency assets will pass the investment contract test and thus be subject to securities regulations.
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Gensler then compared the current cryptocurrency ecosystem to the financial landscape in the 1920s when securities laws were not in place. Gensler said that the cryptocurrency ecosystem is facing the same situation as the financial environment, leading to multiple scams, frauds and bankruptcies before clear regulations are in place. He believes these issues require stricter regulation.
“Without prejudging any one asset, the vast majority of cryptoassets likely meet the investment contract test, thereby subjecting them to securities laws.”
The SEC chairman’s criticism of the cryptocurrency market is not new, as he has reiterated similar stances for years. However, the cryptocurrency community, including some major businesses operating in the United States as well as members of Congress, have called on Gensler to provide more clarity on cryptocurrency regulations.
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