In a highly anticipated appearance before the Senate Banking Committee, Securities and Exchange Commission (SEC) Chair Gary Gensler is set to reinforce his commitment to the regulatory landscape of the cryptocurrency industry. Amid mounting concerns over investor protection and market stability, Gensler maintains that the majority of crypto assets fall under the purview of the SEC and should be treated as securities.

Gensler’s unwavering stance is rooted in his belief that crypto asset securities should be subjected to the same protections as traditional securities. Drawing from the historical context, Gensler highlights how Congress, in its 1933 and 1934 securities laws, explicitly included a broad range of assets under the definition of securities, encompassing the term “investment contract.” Expanding on this, Gensler states, “As I’ve previously said, without prejudging any one token, the vast majority of crypto tokens likely meet the investment contract test.”

This perspective aligns with Gensler’s consistent viewpoint that most crypto intermediaries should comply with securities laws. He emphasizes that if most tokens are subject to these laws, it follows that most crypto intermediaries must also meet the requirements laid out by securities regulations.

Highlighting the risks associated with noncompliance, Gensler draws parallels with the era preceding the enactment of federal securities laws in the 1920s. He intends to showcase the SEC’s proactive approach in addressing these issues through enforcement actions and rulemaking initiatives targeting crypto security markets. However, Gensler clarifies that he will refrain from commenting on ongoing litigation during the hearing.

The backdrop to this hearing is a series of recent court decisions challenging the SEC’s stance on crypto regulations. Notably, Grayscale secured a victory in August when a DC circuit judge mandated the SEC to re-evaluate the asset manager’s application for a Bitcoin spot ETF. Similarly, Ripple Labs achieved a partial win when some of Ripple’s XRP sales were determined not to be in violation of securities laws. However, sales to institutional investors were deemed securities.

Additionally, the SEC’s legal battles with major exchanges such as Coinbase and Binance have brought regulatory concerns to the forefront of industry discussions. Both companies face lawsuits for failure to register with the SEC.

Despite these recent setbacks, Gensler remains steadfast in his belief that the SEC should actively oversee the crypto industry. His testimony today will reiterate the SEC’s position, and the subsequent question and answer session is anticipated to provide insights into Gensler’s response to past challenges and inquiries regarding regulatory gridlock within the crypto space.

At the time of writing, BTC has experienced a swift recovery from yesterday’s significant dip below $25,000 and is currently trading at $25,777.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.