Gary Gensler compared cryptocurrencies to 1920s scams

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US Securities and Exchange Commission (SEC) Chairman Gary Gensler compared the cryptocurrency market to the stock market of the 1920s, teeming with scammers and manipulators.

In his speech at the Piper Sandler conferenceGlobal Exchange & Fintech Conference, SEC Chairman Gary Gensler stated that the cryptocurrency market is full of dishonest traders and scammers. According to him, Congress "cleared" them out of the market through the Securities Act of 1933 and the Securities Exchange Act of 1934, which allowed the US securities markets to flourish for the next 88 years. The SEC can do the same by applying these laws to cryptocurrencies, and crypto companies, in turn, should try to benefit from these laws, Gensler argues.

"With such a wide range of violationsIt is not surprising that there are many problems in the cryptocurrency market. This story is already familiar to us. Cryptocurrencies now resemble the market in the 1920s, before federal securities laws were passed: traders, scammers, Ponzi schemes,” Gensler said.

The head of the SEC noted that in addition to issuers of digitalassets, crypto exchanges are also required to comply with securities laws. This includes requirements for the separation of services relating to asset exchange, clearing and broker-dealer services. This separation of functions will eliminate possible misunderstandings and confusion, said Gensler. The SEC chairman also mentioned the court decision in the Telegram Open Network (TON) case, noting that cryptocurrencies are not exempt from securities laws, even if they can be useful in some way.

“Some securities promoters claimthat their token performs a function that goes beyond a simple investment vehicle. However, as seen in the outcome of the Telegram Open Network litigation, the utility of these tokens does not invalidate their designation as an investment contract,” Gensler said.

The crypto community sharply criticizes Gensler and the SECfor their tough approach to cryptocurrencies, especially after the regulator sued the largest cryptocurrency exchanges Binance and Coinbase. Cryptocurrency advocates are outraged that the SEC is pushing innovation out of the US with its actions.