Gary Gensler, speaking at the Securities Enforcement Forum on November 4, denied that new technological labels change the realities of securities definitions, using decentralized finance and crypto goods as examples.
Many cryptocurrency-based products, according to Gensler, fall under existing definitions of securities, emphasizing the need to assess based on facts and circumstances rather than new taxonomy. This is despite the fact that many in the crypto business have asked for specific guidance on topics such as which tokens are securities and which are not.
The Securities and Exchange Commission‘s chairman, Gensler, said:
“Sometimes, people focus on labels. For example, we hear terms like ‘decentralized finance’ (DeFi), ‘currency,’ or ‘peer-to-peer lending.’ It can seem easy to take these words at face value. Make no mistake: regardless of the label or purported mission, we will be looking at the economic realities of a given product or arrangement to determine whether it complies with the securities laws.”
“Some market participants may call this ‘regulation by enforcement.’ I just call it ‘enforcement.”Gensler added later, referring to a charge that many have thrown against the SEC, such as in the ongoing action against Ripple over XRP issuance.