SEC Chairman: Vast Majority of Crypto Tokens Meet Investment Contract Test, Most Crypto Intermediaries Must Also Comply with Securities Laws
SEC Chairman Gary Gensler stated in a speech ahead of the 2023 Global Exchange and FinTech Conference that there is no indication that investors and issuers in crypto securities markets should not be protected by securities laws. As he has stated multiple times, the vast majority of crypto tokens meet the investment contract test. These tokens are promoted by teams through websites and Twitter accounts and do not emerge out of thin air.
On June 9, according to TuoniaoX.com, SEC Chairman Gary Gensler stated in a speech released ahead of the 2023 Global Exchange and FinTech Conference that there is no indication that investors and issuers in crypto securities markets should not be protected by securities laws. As he has stated multiple times, the vast majority of crypto tokens meet the investment contract test. These tokens are promoted by teams through websites and Twitter accounts. These tokens do not emerge out of thin air. Crypto securities issuers need to register their investment contract offerings and sales with the SEC or satisfy exemption requirements.
Gary Gensler further noted that given most crypto tokens are subject to securities laws, most crypto intermediaries must also comply with securities laws. If intermediaries do not register, investors are harmed and U.S. financial markets may also be affected. In other areas of securities markets, exchange, broker-dealer, and clearing functions are separated, which helps mitigate conflicts that may arise from mixing such services. Crypto intermediaries may need to separate business lines, establish rule books to prevent fraud and manipulation, properly segregate customer funds, mitigate conflicts, or change their clearing and custody approaches.