SEC Chair Gary Gensler argued Thursday that crypto assets and exchanges cannot hide behind claims that their tokens provide utility. “Some promoters of crypto asset securities contend that their token has a function beyond simply being an investment vehicle,” Gensler said. “Some additional utility does not remove a crypto asset security from the definition of an investment contract.”
Gensler offered a full-throated defense of the SEC’s recent enforcement actions, saying that mainstream finance would never be allowed to get away with the behaviors that are commonplace in crypto. “When crypto asset market participants go on Twitter or TV and say they lacked ‘fair notice’ that their conduct could be illegal, don’t believe it,” Gensler said. “They may have made a calculated economic decision to take the risk of enforcement as the cost of doing business.”
The SEC Chair also pushed back on industry claims that it’s impossible for crypto platforms to register with the SEC. “I disagree with the notion – and recent history disproves it – that crypto intermediary compliance isn’t possible,” he said. “I do recognize – and, again, think it’s appropriate – that it takes work.”