The Reach of US Securities Law over Encrypted Assets

02/27/2023 07:38 • AI & Tech Insights • 122 views

According to reports, Gary Gensler, chairman of the United States Securities Commission, reiterated in a recent interview with New York magazine (NYMAG) that all encrypted assets and all transactions are subject to the United States securities law, except for Bitcoin spot transactions.

Lawyer of Blockchain Association: Gensler’s remarks or opinions are not laws, and SEC has no right to supervise any of them

Interpretation of the news:

The United States Securities Commission (USSEC) is the regulatory body in charge of enforcing securities laws in the United States. Recently, the chairman of USSEC, Gary Gensler, gave an interview with New York magazine (NYMAG) where he emphasized the reach of US securities law over encrypted assets.

Encrypted assets, also known as cryptocurrencies, are digital tokens that use encryption techniques to secure their transactions and to control the creation of new units. Bitcoin was the first and most well-known cryptocurrency, but now there are thousands of cryptocurrencies in circulation. Some countries consider cryptocurrencies as a form of currency, while others classify them as securities.

According to Gensler, all encrypted assets, except for Bitcoin spot transactions, fall under the remit of US securities law. This declaration has been met with controversy and confusion among cryptocurrency advocates, many of whom assert that cryptocurrencies should not be classified as securities since they do not fall under the traditional definitions of securities.

However, the USSEC has been tightening its regulations over the last few years, seeking to protect investors and prevent fraud. Gensler has taken a particularly hardline stance on cryptocurrencies, citing their lack of regulation and the potential for market manipulation. During his tenure as chair, Gensler has also been vocal in his support to implement regulations to scrutinize stablecoins, a type of cryptocurrency linked to traditional currencies like the US dollar, that has been growing in popularity.

As the cryptocurrency market continues to grow and innovate, it remains to be seen how US securities law will be applied to the ever-expanding list of cryptocurrencies in circulation. It is clear, however, that US regulators are determined to ensure that they retain control over the market, and that investors are adequately protected.

In summary, while the USSEC has declared that all encrypted assets – except for Bitcoin spot transactions – are to be considered securities, there remains uncertainty within the cryptocurrency community as to whether this classification is necessary or helpful. Regardless of the implications of Gensler’s decision, it seems that the US regulator is determined to uphold its oversight, placing investors’ protection at the forefront of its priorities.

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