SEC chair Gary Gensler in a speech tells EU parliament “financial innovations throughout history don’t long thrive outside of public policy frameworks”


On 1st
September, Gary Gensler, the Chairman of the U.S. Securities and Exchange
Commission (SEC), delivered a speech on the issues ranging from
cryptocurrency regulations to disclosure rules on risks related to climate change,
before European Parliament committee hearing on Economic and Monetary affairs.
Not on behalf of the Commission
or the SEC staff, in solely Gensler’s view, Bitcoin is effectively bringing
European and American markets closer together, “this innovation has been
and could continue to be a catalyst for change in the fields of finance and
money.”
Speaking virtually in the
committee on Wednesday, Gensler discussed the SEC’s main concern in financial
regulation, including Bitcoin and other digital assets, its efforts to
make new rules on digital engagement efforts by app-based stock brokers, and
new disclosure rules on climate change risk.
Stating protecting
investors, facilitating capital formation, and maintaining fair, orderly, and
efficient markets, are parts of SEC’s task, he added, “Our global markets are
inextricably linked, with money flowing between them in microseconds. New
financial technologies continue to change the face of finance for investors and
businesses.”
Though crypto’s potential
recognition, Gensler expressed taciturnity over the present regulation on
crypto trading by commenting, “For those who want to encourage innovations in
crypto, I’d like to note that financial innovations throughout history don’t
long thrive outside of public policy frameworks.”
Gensler is particularly worried about the absence of investor protections as these platforms do not have clear obligations in place for investor protection, unlike traditional exchanges. “This $2 trillion asset class right now does not have that (investor) protection. It frankly doesn’t have it in Asia, North America or Europe,” he said.
“There’s no broker in between the public and the platform,” Gensler said. Although that’s a key benefit, but brokers are also heavily regulated. So without them and limited oversight over exchanges, there will be a regulatory gap.
Turning to utility tokens , Gensler contrasted them with laundromat tokens or tickets to the opera, saying that entrepreneurs choose to perceive their tokens in this way to sidestep regulation, but the reality is quite different.

Joyashree Dey
CBW - External Analyst
INDIA