Gary Gensler compared cryptocurrencies to 1920s scams

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

In his speech at the Piper conferenceSandler Global Exchange & Fintech Conference, SEC Chairman Gary Gensler said that the cryptocurrency market is full of dishonest traders and scammers. He said Congress "purged" them from the market with the Securities Act of 1933 and the Securities Exchange Act of 1934, allowing U.S. 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 violationsrequirements, it 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 issuersdigital assets, crypto exchanges are also required to comply with securities laws. This includes requirements to separate asset exchange, clearing, and broker-dealer services. This division of functions will eliminate possible misunderstandings and confusion, Gensler said. The SEC chairman also mentioned the court's decision in the Telegram Open Network (TON) case, noting that cryptocurrencies are not exempt from securities laws, even if they may be useful in some way.

"Some securities promotersclaim that their token serves a function beyond a simple investment tool. However, as can be seen from the outcome of the Telegram Open Network litigation, the utility of these tokens does not negate their designation as an investment contract,” Gensler said.

The crypto community sharply criticizes Gensler andSEC for their tough approach to cryptocurrencies, especially after the regulator sued the largest cryptocurrency exchanges Binance and Coinbase. Cryptocurrency supporters are angry that the SEC's actions are crowding out innovation from the United States.