Some lawmakers are not happy about SEC chair Gary Gensler pushing to hold the crypto firms to the same rules that apply to stocks and bonds. The lawmakers say the collapse of FTX shows that crypto needs its own set of guardrails. They believe Gensler’s enforcement strategy moved too slowly to stop FTX from imploding.
The SEC chair hasn’t included major crypto regulations among the more than 40 rules he proposed since taking office in April 2021. In fact, he has demanded crypto firms comply with existing SEC requirements for exchanges, broker-dealers, and public companies. Moreover, Gensler added more enforcement attorneys to the regulator’s litigation strategy from focusing on individual tokens to the trading platforms that sell cryptocurrencies. He says there are more than 10,000 cryptocurrencies in existence but only a handful of major platforms to cater for it to investors in the United States.
The Securities and Exchange Commission has brought or settled more than 90 lawsuits related to cryptocurrencies since 2018 and more than 30 such cases have come during Gensler’s time in office. He sees the majority of cryptocurrencies as securities, similar to stocks and bonds. Lawmakers and investors have highlighted that the SEC hadn’t done enough to protect FTX’s customers. Rep. Josh Gottheimer, in a hearing last week, said the SEC hasn’t written rules and failed to foresee and prevent disasters in the industry and protect consumers – from Terra-LUNA to FTX collapse. Furthermore, the collapse of Sam Bankman-Fried’s empire has been described as a classical fraud.