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The annual SEC Speaks event is in full swing today at the Ronald
Reagan Building in Washington, DC. This is an SEC marquee event for
securities practitioners in good part because it gives senior SEC
leaders an opportunity to give updates on current initiatives and
priorities of the SEC for the coming year. Chairman Gary Gensler
spoke this morning and focused his entire speech on the regulation
of cryptocurrency and intermediaries. Enforcement Edge was there
and ready to blog.
As we have previously discussed in a client
Advisory, the crypto industry has become an increasing focus of
the SEC under Chair Gensler.
Some key takeaways from Chair Gensler’s speech include the
following:
- According to Chair Gensler, the “vast majority” of
crypto tokens are securities. - Consistent with Supreme Court precedent, the SEC will regulate
investments by whatever name they are called and whatever form they
take. The SEC will look at the facts and circumstances of the
investment, not what it is called or what it is labeled. - Investors deserve disclosures related to these types of
investment. - Stablecoins raise concerns for the SEC. Chair Gensler suggested
that the SEC will look at the mechanisms that are used to maintain
value—for example, do Stablecoins have revenue sharing, money
market or other attributes that may require registration? - Chair Gensler noted that crypto intermediaries—whether
decentralized or not—raise risks and function like exchanges
and, in some instances, like broker-dealers. - The SEC is looking at whether intermediaries need to form
separate legal entities—one for an exchange; one for
custodial purposes; and one that will operate as a broker
dealer. - Chair Gensler, a former CFTC chair, noted that some entities
may require dual SEC and CFTC registration.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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