The President of the SEC, Gary Gensler, said some cryptocurrencies should be treated as securities.
Gensler addressed the American Bar Association’s Derivatives and Futures Law Committee, during the Virtual Mid-Year Program, and said cryptocurrencies whose prices are linked to securities should respect the same laws as securities.
“Security” refers to a regulated financial product, and since there are tokens in the crypto markets that are backed, guaranteed, or directly linked to securities, they should be subject to the same regulations.
Gensler said that initiatives by some crypto platforms to offer tokens that reflect the prices of securities operate like derivative offerings and therefore should be subject to the securities derivative offer laws.
“It doesn’t matter whether it’s a stock token, a stock-backed value token, or any other virtual product that offers synthetic exposure to the underlying securities. These platforms – whether in the decentralized or centralized financial space – are implicated by securities laws and must operate within the framework of our securities regime ”.
He then added:
“Then any offer or sale to retail participants must be registered under the Securities Act of 1933 and carried out on a national stock exchange.”
These passages refer, perhaps not by chance, to products such as Binance’s stock tokens, which were recently removed from the platform after a warning from the Italian Consob. However, it is not just Binance that offers similar products, and at this point, it is plausible to imagine that any other crypto platform offering this type of token should at least remove them from the US market.
Gensler also warned that the SEC may take action in the future against unregulated platforms that offer these tokens comparable to securities derivatives.
Lately, it’s not just tokens that replicate stock prices, but also stablecoins that have come under scrutiny by regulators, especially those in the United States.
A number of stablecoins, which in theory should be guaranteed in fiat currency, are in fact not 100% backed by fiat currency, but also partially backed by securities. This is true of both the USDT and the USDC, for example, and if Gensler’s point of view is maintained, the SEC policy in this regard could become much stricter. However, these new financial products would need to be better supervised within a regulatory framework at the cutting edge of new technologies.