Washington D.C., September 27, 2023 – Securities and Exchange Commission (SEC) Chair Gary Gensler addressed the United States House Financial Services Committee today, shedding light on the SEC’s evolving approach to cryptocurrency enforcement and its efforts to adapt to technological advancements.
Gensler began by emphasizing the SEC’s commitment to updating regulations to align with the rapidly evolving technology and business landscape of the 2020s. He acknowledged the criticism directed at the SEC for its “regulate-by-enforcement” strategy, which has been accused of stifling innovation in the cryptocurrency sector.
During the hearing, Gensler made a noteworthy statement, asserting that Bitcoin (BTC) is not classified as a security. This stance marked a departure from his previous, more stringent views on cryptocurrencies, as evidenced by a leaked 2018 video. While he clarified that Bitcoin did not meet the criteria of the Howey Test for securities, he refrained from categorizing it as a commodity.
Gensler also highlighted the role of artificial intelligence and predictive data analytics in the financial industry, calling it a “transformational age.” He noted the potential for increased financial inclusion and improved user experiences but stressed the importance of managing conflicts of interest arising from these technologies.
The SEC’s proposal, set forth in July 2023, requires firms to analyze and address conflicts of interest resulting from predictive data analytics’ use when interacting with investors. Whether Gensler will comment on the ongoing legal battles involving Coinbase and Binance.US, two U.S.-based cryptocurrency exchanges charged with alleged securities law violations, remains to be seen.
As the cryptocurrency landscape continues to evolve, Gensler’s testimony signifies the SEC’s commitment to adapting its regulatory framework to the challenges and opportunities presented by emerging technologies.
