The Enforcement Division of the U.S. Securities and Exchange Commission (SEC) continues efforts to bring the crypto industry under securities overreach. Gurbir Grewal, the director of the enforcement division, has reiterated that the crypto industry should not expect to get a pass from the SEC.
In remarks he made while speaking at SEC Speaks 2022, a conference organized by the Practising Law Institute (PLI), Grewal stated that the SEC is aware of criticisms of its approach to the crypto industry. These criticisms, which have majorly targeted the enforcement division include that the SEC is “picking winners and losers” and “stifling innovation,” he noted.
He further argued that these criticisms do not come because the SEC has unfairly targeted crypto to the exclusion of other products or markets. Instead, crypto market participants are angry because the SEC is not giving the industry “a pass from the application of well-established regulations and precedents.”
Grewal maintained that the SEC will continue to impartially enforce the laws to protect crypto investors. This is especially important as reports have been emerging that crypto could be having an outsized impact on non-White and lower-income individual retail investors who are getting increasingly drawn to the market.
“We’ve been given a hard, but important job: to impartially enforce the laws and rules on the books for the benefit of investors and our markets. So if we are going to uphold our mandate, we can’t simply abandon the field when we confront potentially novel issues, and that’s especially true when those issues trigger passionate beliefs,” he said.
He added that sticking to this approach will ensure that trust in the regulatory system does not break down in the long run as investors will be protected optimally.
SEC calling crypto projects and intermediaries to register with it
Grewal was not the only SEC official to focus his speech on the crypto industry. During the conference, SEC chair Gary Gensler, also submitted that the majority of crypto tokens are securities going by the Howey and Reves test established by the U.S. Securities Act.
He implored crypto projects and intermediaries to willingly come forward and register under the SEC and not expect the SEC to change its oversight rules simply because new technology is being used to issue securities to the investing public.
“Investors, issuers, and our overall economy have benefited from those securities laws and the SEC’s engagement for nearly 90 years. That oversight should not change just because the issuance and trading of certain securities is based on a new technology,” Gensler denoted.
The Enforcement Division has previously enlarged the headcount of its Crypto Assets and Cyber Unit, as well as asked Congress to allocate more resources to keep pursuing regulations violators in the crypto market.