SEC's Gensler Says Crypto Firms Skip Public Disclosures by Dodging Registration

New York, March 22, 2024  - U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler singled out the crypto industry as a problem area in a speech on the "public good" of securities disclosure on Friday.

Gensler, whose tenure atop the agency has been marked by a regulatory crackdown on what he argues is a largely noncompliant industry, suggested that digital asset businesses are among those seeking to "whittle away at the SEC's disclosure regime," which requires companies to register securities and provide information to investors about them.

"There are participants in crypto securities markets that seek to avoid these registration requirements," he said in remarks prepared for an event at Columbia Law School. "No registration means no mandatory disclosure."

"Many would agree that the crypto markets could use a little disinfectant," Gensler added.

The regulator is pursuing several enforcement actions against companies it accuses of failing to register as exchanges and listing unregistered securities, such as Coinbase Inc. and Binance. It's also reportedly investigating Ethereum (ETH), potentially considering classifying that asset as a security – unlike bitcoin.

Gensler's rhetoric that crypto platforms need to get registered may be tested soon. The first firm to jump through the hoops as an approved special-purpose crypto broker-dealer, Prometheum, is getting ready to open for business, executives there have said. Meanwhile, Coinbase has asked an appeals court to step in and force the SEC to engage in crypto-specific rulemaking.