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1 August 2021
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SEC: for Gary Gensler some cryptocurrencies are securities


SEC President Gary Gensler said some cryptocurrencies need to be treated as security. 

Gensler spoke before the American Bar Association Derivatives and Futures Law Committee, during the Virtual Mid-Year Program, and said that cryptocurrencies whose prices depend on securities should comply with the same laws that apply to securities.

In fact, “securit” refers to a financial product regulated by precise regulations, and given that on the crypto markets there are tokens supported, collateralized, or directly connected to security, these too should comply with the same regulations. 

Gensler said initiatives by some crypto platforms regarding offering tokens that mirror security prices function as derivative offers, and therefore must be subject to the laws on offering derivatives on securities.

He said: 

“It doesn’t matter if it’s an equity token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to the underlying securities. These platforms, both in the decentralized and centralized financial space, are implicated by the security laws and must function within our security regime ”. 

Then he added: 

“Therefore, any offer or sale to retail investors must be registered under the Securities Act of 1933 and made on a national stock exchange.” 

These steps refer, perhaps not surprisingly, to products such as Binance’s stock tokens, recently removed from the platform after the warning from the Italian Consob. However, it is not only Binance that offers similar products, and at this point it is plausible to imagine that other crypto platforms that offer this type of token should at least withdraw them from the US market. 

Gensler also warned that the SEC may take action in the future against unregulated platforms that will offer these tokens comparable to security derivatives. 

Lately, not only tokens that replicate the prices of equities, but also stablecoins are under observation by regulators, especially US ones . 

In fact, several stablecoins that in theory should be collateralized in fiat currency are actually not 100% supported by fiat currency, but also partially, for example, by securities that fall into the security category. This is true for both USDT and USDC, for example, and if Gensler’s line were to prevail, the SEC’s policy in this regard could become much more stringent. However, it would be necessary to better frame these new financial products within a regulatory framework updated to new technologies. 

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