To recap, the main problem with cryptocurrency regulation in the US is the desire to govern the digital asset industry through the Securities Act of 1933. At the time, cryptocurrencies and the Internet were out of the question, so it is not surprising that SEC Chairman Gary Gensler refers to all digital assets as securities based on that law.

Industry participants are not happy with this approach, so they are asking for an adequate and separate legal framework for crypto. However, it is clear from Gensler’s comments that he does not want to do this as a matter of principle.

The challenges of regulating the crypto market in the US

Initially Gensler’s speech barely touched on digital assets, but conference host Tom Barkin, who is also president and CEO of the Federal Reserve Bank of Richmond, did mention issues of concern to many. In particular, he asked Gensler about the SEC’s court case against Coinbase, and whether the chairman thinks the regulator is lagging behind in terms of controlling the crypto market.

According to Decrypt’s sources, Gary responded by briefly mentioning Bitcoin’s anonymous creator Satoshi Nakamoto, and the innovations his brainchild has given the world.

That said, Gensler is adamant that the decisions made by his agency are correct. According to him, most crypto start-ups are allegedly built on deceiving consumers. Here’s a relevant rejoinder.

Their decentralisation is a false message. Crypto start-ups tend to be centralised, you can find a website and a team of entrepreneurs around most of them.

What exactly did Gensler mean by that? This sort of thing resembles a weak innuendo for crypto projects, as you can’t imagine them without their own websites and development teams. Such things are a common necessity in the internet age and are not in themselves a defining feature of centralisation.

For example, the cryptocurrency industry knows the people who are part of the Ethereum Core development team. However, that doesn't mean that any other developer can't come up with their own idea for further implementation and deployment in the protocol. And in general, such a rejoinder looks like an attempt to shift attention away from the subject matter to the Gensler-led agency.

The SEC chairman was also, for some reason, surprised by a question about the regulation of the crypto industry. Gensler believes that all the necessary regulations are “already in place,” well, all companies have to do is comply with them. Although at a congressional meeting a few weeks ago, Gary wasn’t so straightforward – then he avoided the question of exactly what asset class crypto belongs to, which is essentially the basis for its further regulation.


In addition, the claim that there are rules for the digital asset industry could be false. For example, in March 2023, Ripple CEO Brad Garlinghouse recalled that Securities Commission guidance regularly encourages cryptostartups to register their own tokens to supposedly avoid problems with the law later on. However, according to Brad, such a regulatory mechanism is trivially non-existent, which means the SEC is simply preventing trouble.

The latter, by the way, could be massive. For example, in February, crypto-exchange Kraken was ordered to pay a $30 million fine for steaking platform for Americans - retroactively, of course. Well, in the first half of May, the already mentioned Garlinghaus said that Ripple's current litigation with the SEC will cost the former about $200 million.


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Gensler also referred to financial intermediaries in traditional markets – he equated them with cryptoplatforms that hold their clients’ funds. Accordingly, they too supposedly have to obey the rules imposed on intermediaries in traditional markets. If that suddenly “seems too complicated”, the Commission is “ready to help cryptostartups come into compliance with existing regulations”.

“SEC assistance” means lawsuits, orders and actions based solely on the regulator’s powers. The Commission can “pressure” the industry, which is why it does it without any outside oversight. Given what is going on, such statements look like hypocrisy on Gensler’s part and even mockery. Well, the agency itself is sure to continue stumbling in the wheels of crypto-enthusiasts, because its employees are clearly not going to create a normal framework for the regulation of digital assets.


It seems that Gensler, along with the SEC, are not even close to helping the cryptocurrency industry grow. Instead, the regulator continues to cause problems for popular companies, as well as writing large fines to them, thus pushing businesses out of their own jurisdictions. And since this has been going on for a long time, it suggests that these actions are purposeful. One would like to believe that other American officials outside the agency will be able to save the situation in time to tell Gary to get out.


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