SEC’s Gensler: Crypto Market Filled With Unregistered Securities, Prices 'Open to Manipulation'

By Will Gottsegen

At a conference hosted by the Aspen Institute, SEC Chair Gary Gensler stressed the need for stricter and better enforced investor protections around cryptocurrencies.

"Right now, we just don't have enough investor protection in crypto,” said Gensler. “Frankly, at this time, it's more like the Wild West."

Most cryptocurrencies, he explained, are primarily "highly speculative stores of value.”

Once a partner at Goldman Sachs, Gensler was a relatively progressive regulator during his tenure as Chair of the CFTC under President Obama; today’s speech was his first major statement of intent regarding crypto since taking over the SEC in April.

“I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight,” he explained. “This leaves prices open to manipulation. This leaves investors vulnerable.”

“While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50 or 100 tokens, any given platform has zero securities,” the SEC chairman added.

Gensler said that while most cryptocurrencies don’t fit the conventional three-part definition of “money” (that is—a medium of exchange, a unit of account, and a store of value), the blockchain technology behind it may have a kind of inherent value.

It’s something he said learned as a professor at MIT, teaching courses on cryptocurrency: “In that work I came to believe that though there was a lot of hype masquerading as reality in the crypto field, [pseudonymous Bitcoin inventor Satoshi] Nakamoto’s innovation is real. And some in the public sector would say, ‘Well, no’—almost like wishing it away—I really do think there’s something real about the distributed ledger technology moving value on the internet without a central intermediary.”

That reference to “some in the public sector” could be a nod to crypto skeptics like Elizabeth Warren and Sherrod Brown, both of whom spoke about the dangers of blockchain tech at a recent hearing of the Senate Banking Committee.

Gensler suggested DeFi protocols, crypto lenders, and stablecoins as potential targets of an expanded regulatory regime.

While he may appreciate the tech itself, Gensler stood firm on the need for investor protections.

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