Crypto Markets Require Transparency, Says SEC Chair Gary Gensler

The US Securities and Exchange Commission (SEC) Chair Gary Gensler has criticized crypto industry participants for avoiding registration requirements with the regulator. In his closing remarks during a speech at Columbia Law School, Gensler emphasized the importance of mandatory disclosure for market participants, referring to Supreme Court Justice Louis Brandeis’ statement that “Sunlight is said to be the best of disinfectants.”Gensler expressed concern over certain participants in the crypto securities markets seeking to evade registration requirements, which results in a lack of mandatory disclosure. He highlighted the need for transparency in the crypto markets, suggesting that some disinfectant measures could benefit the industry. 

Gary Gensler Wages War Against Crypto Companies

Over the past year, the SEC has filed numerous lawsuits against crypto firms, with SEC Chair Gary Gensler consistently asserting that most cryptocurrencies should be classified as securities.For one, the agency initiated a civil case against Sam Bankman-Fried, co-founder of FTX. In addition to the case against Bankman-Fried, the SEC filed lawsuits against other major crypto players, including Binance, its CEO Changpeng Zhao, and Coinbase.Many industry players and advocacy groups have called on the SEC to establish clear regulatory guidelines to foster innovation within the United States.The SEC has reportedly issued subpoenas as part of its campaign to potentially classify Ethereum (ETH) as a security under its regulatory purview. “[T]here still are those who would like to whittle away at the SEC’s disclosure regime,” said the SEC chair. 

“There are participants in crypto securities markets that seek to avoid these registration requirements. No registration means no mandatory disclosure. Many would agree that the crypto markets could use a little disinfectant.”

In recent years, the SEC has made progress in approving crypto-related exchange-traded products for U.S. exchanges, including investment vehicles tied to ETH and Bitcoin futures, along with the first spot Bitcoin exchange-traded funds in January.

SEC Postpones Decision on Futures ETH ETF

In a separate development, the SEC has once again extended the deadline to decide on the approval of Grayscale’s Ethereum Futures Trust exchange-traded fund (ETF). The SEC announced that the previous deadline of March 31 will be postponed to May 30. The ETF proposed by digital asset management firm Grayscale aims to invest in Ethereum futures contracts.The SEC’s decision to extend the deadline follows its earlier postponement in December 2023, during which it sought additional public input on whether the ETF should be listed. Grayscale had proposed listing and trading shares of its Ethereum Futures Trust ETF under the New York Stock Exchange Arca Rule 8.200-E in September 2023. Bloomberg ETF analyst James Seyffart suggested that Grayscale might be using its futures ETF application as a strategic move to influence the SEC’s decision on approving its spot Ether ETF. If the SEC were to approve Grayscale’s futures ETF, it could strengthen Grayscale’s argument for the approval of its spot Ether ETF application.Furthermore, the SEC has also delayed its decision on whether to approve Grayscale’s spot Ether ETF, opening the application to public comments on January 25.