Following cryptocurrency exchanges, the U.S. Securities and Exchange Commission (SEC) has delivered another blow to the crypto sector.
On Tuesday, June 6, SEC Chairman Gary Gensler hinted in a media program that cryptocurrencies and other digital tokens are essentially unnecessary in this world. Gensler said:
"We don't need more digital currencies. We already have digital currencies. They're called the dollar, the euro, and the yen. They're all digitized now. We already have digital investments."
Before Gensler's remarks, the SEC had just announced lawsuits against two major cryptocurrency exchanges.
On Monday of this week, the SEC formally charged Binance, the world's largest cryptocurrency exchange by trading volume, and its CEO, Changpeng Zhao, with violating U.S. securities laws. The SEC alleges that Binance and Zhao issued Binance Coin and the stablecoin BUSD without registering, accusing them of participating in widespread fraud, conflicts of interest, lack of disclosure, and deliberate evasion of legal networks.
Earlier on Tuesday, the SEC also announced that it is suing Coinbase, the largest cryptocurrency exchange in the U.S., for securities law violations. The SEC alleges that Coinbase allows users to trade cryptocurrencies that are essentially unregistered securities, ignoring securities law oversight and evading related disclosure requirements.
At the end of March this year, Coinbase received a notice from the SEC, warning that the platform will face enforcement action for violating investor protection laws.
Wall Street Journal mentioned that SEC Chairman Gensler has repeatedly stated that many tokens and products offered by cryptocurrency companies are securities, and trading platforms need to register with the SEC. Some media reported that Coinbase representatives met with the SEC more than 60 times in the past nine months in an attempt to resolve these issues, but they have not been successful.
On Tuesday, Gensler also mentioned to the media the difference between cryptocurrency exchanges and traditional exchanges, saying that "these trading platforms, which call themselves exchanges, are blending multiple functions. In the traditional financial realm, we don't see the New York Stock Exchange operating like a hedge fund market maker."
Gensler admitted that the delay in lawsuits against cryptocurrency platforms was because "doing things by the book takes time." He also pointed out that investors should trust that the SEC is focusing on risks in the digital currency field.
He said that U.S. securities laws benefit the investing public, and cryptocurrencies should not be any different. These platforms and intermediaries all need to comply with regulations.
On Tuesday, Coinbase's stock price dropped by double digits, initially falling nearly 21%, and the decline narrowed to within 15% at midday, still set to hit a new closing low since January of this year.
