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Gary Gensler Says Investors Deserve Disclosure Because “Most” Crypto Chains Are Securities

Securities and Exchange Commission Chairman Gary Gensler has again compared cryptocurrencies to securities, saying that investors still lack the information needed to buy and sell digital currencies.

In an interview on Thursday with former Commerce Secretary Penny Pritzker at NYC Summit, Gensler says that most digital tokens are similar to securities because companies or groups of establishments run by entrepreneurs are looking to attract mass investors.

He added that crypto intermediaries should register with the agency.

“I said, come, talk to us, help register intermediaries — crypto exchanges, crypto lending platforms, crypto broker dealers, posted sign,” he said at the conference.

Gensler added that the SEC could use its immunity authority where possible to help regulate regulations.

“This sector, cryptocurrency, is not going to grow – if you think it will – unless you have some confidence that the public can have in the sector,” he said.

In prepared comment Ahead of a separate event on Thursday, organized by the Law Institute of Practice, Gensler said that “the vast majority” of cryptocurrencies are securities and that crypto investors will be given the same protections as those who are buying and selling. sell shares.

“Investors deserve disclosure to help them sort between investments they think will grow and investments they think will underperform,” he said.

Gensler also said that he would continue to apply the Howey Test, established by the Supreme Court in 1946, to determine whether cryptocurrencies are securities. According to the Howey test, an “investment contract” exists “when there is an investment of money in an ordinary enterprise with a reasonable expectation of a return on the efforts of others,” according to to the SEC. If the transactions qualify as investment contracts, they are considered securities.

The SEC chairman also said that certain stablecoins can in some cases be defined as securities “depending on their properties, such as whether these instruments pay interest, directly or indirectly, through affiliates or not; what mechanisms are used to maintain value; or how tokens are offered, sold, and used in the cryptocurrency ecosystem. “

Gensler, who last year calls the crypto industry the “Wild West,” added that cryptocurrencies do not need any additional guidance, pointing to several examples of guidance issued by the SEC — including the DAO Report, which shows that the tokens are issued by virtual organization The DAO release are securitiesand Munchee Order, resulting in Munchee Inc. based in California. $15 million refund was raised from the initial coin offering in 2017. He also cited “dozens of enforcement actions” as one way the SEC communicated the guidelines.

“Not liking the message,” he said on Thursday, “isn’t the same as not receiving it.”

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