SEC Chair Gary Gensler’s recent testimony before the United States Senate has sparked speculation within the crypto community. Gensler’s emphasis on investor protection and compliance with securities laws has given hope to supporters of cryptocurrencies, particularly regarding the regulation of crypto assets and the potential approval of Bitcoin Spot exchange-traded funds (ETFs).
He highlighted that the legal definition of a security includes the term “investment contract,” implying that most crypto tokens fall under securities laws. However, a recent ruling favored Ripple Labs, stating that programmatic sales of XRP did not meet the criteria of an investment contract.
Despite this ruling, the SEC maintains its stance on noncompliance with securities laws and the need for enforcement actions. The SEC is actively involved in rulemaking efforts to establish regulatory frameworks for crypto markets, including platforms involved in trading crypto asset securities and decentralized finance (DeFi) systems. Gensler also discussed a proposed update to the investment adviser custody rule, aiming to enhance protective measures for all crypto assets.
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