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The U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler delivered a speech on crypto and regulations. Gensler reiterated his belief that most digital assets are classified as securities under U.S. law and called for companies to register under SEC supervision.

Gensler said that current U.S. securities rules have evolved since their implementation in 1934. These regulations are, in his view, compatible with the current state of the crypto market “regardless of its underlying technology”.

The above seems aimed at those critics that have asked the Commission for either new rules or clear guidelines. The SEC Chair claims these guidelines have been “provided” by the government body on several occasions. Gensler emphasized that the most important thing must be “investor protection”, he said:

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Not liking the message isn’t the same thing as not receiving it.  Investors are following crypto projects on social media and scouring online posts about them. These tokens have promotional websites, featuring profiles of the entrepreneurs working on the projects.

Most Crypto And Tokens Are Securities?

Similar to remarks stated by other U.S. government officials, Gensler claims investors must be protected from certain behaviors in the crypto space, such as fraud, money laundering, price manipulation, and others.

The SEC Chair claims that there are over 10,000 crypto tokens in the nascent industry with a “vast majority” operating as unregistered securities as they allegedly fit the criteria of the Howey Test. This mechanism allows the regulator to determine if an asset is a security or a commodity.

At this point, the SEC Chair made the case that most digital asset projects, in his view, operate as traditional companies except for a “handful of tokens”. The SEC Chair made a distinction that seems poised to gain more relevance over the coming months: crypto security tokens and crypto non-security tokens.

Of the largest digital assets currently trading in the nascent sector, Bitcoin might be the only one classified under the latter. At least, the SEC Chair only spoke about Bitcoin as an equivalent of gold, during his speech. SEC Gensler said the following, sending a message to companies in the nascent sector:

investors deserve disclosure to help them sort between the investments that they think will flourish and those that they think will flounder. Investors deserve to be protected against fraud and manipulation. The law requires these protections. Thus, I’ve asked the SEC staff to work directly with entrepreneurs to get their tokens registered and regulated, where appropriate, as securities.

BTC’s price moving sideways on the daily chart. Source: BTCUSDT Tradingview
U.S. SEC Wants Crypto Companies To “Come In, Talk To Us”

In regard to stablecoin, Gensler claimed some might also be operating as securities depending on their “mechanism”. In that sense, the SEC Chair called companies, exchanges, lenders, and other actors in the nascent asset class to “come in, talk to us and register”.

There was a hint of being “flexible” with these actors if they opted for that route. However, some in the space distrust Gensler’s words claiming that all crypto companies that have followed it end up in a legal battle with the regulator.

In that sense, legal expert and General Counsel at Delphi Digital Labs Gabriel Shapiro called Gensler’s speech “deeply disingenuous” based on the regulator’s past behavior. Shapiro added:

it is a fantasy that small software teams with no revenue-generating business can afford to become full-blown exchange-act reporters–a regime costing millions per year (…). the idea that “thousands of tokens” and therefore “thousands of token ‘issuers’” can just “come in and register” is simply wrong…only the bluest of blue-chip revenue-generating corporations can afford this…this won’t be compliance, it will be extinction (…).

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