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SEC Chair: Crypto Is a Field Rife With Fraud, Abuse, and Misconduct — 'It's Daunting'

U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler testified before the Senate Banking Committee, stating that crypto is “a field which is rife with fraud, abuse, and misconduct.” He also stated that the securities regulator is still reviewing applications for spot bitcoin exchange-traded funds (ETFs).

Gary Gensler’s Testimony Before Senate Committee

The chairman of the Securities and Exchange Commission (SEC), Gary Gensler, talked about cryptocurrency during his testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on Tuesday.

Reiterating his view that most crypto tokens are securities, Gensler told lawmakers: “Without prejudging any one token, the vast majority of crypto tokens likely meet the investment contract test. Given that most crypto tokens are subject to the securities laws, it follows that most crypto intermediaries have to comply with securities laws as well.”

The SEC chief stressed:

In terms of crypto … I’ve been around finance for 44 years now … and I’ve never seen a field that’s so rife with misconduct. It’s just – it’s daunting.

He further described the crypto industry: “Right now, unfortunately, there’s significant non-compliance and it’s a field which is rife with fraud, abuse, and misconduct.”

Senator Bill Hagerty (R-TN) asked Gensler during the hearing what the SEC needs to see from issuers to approve spot bitcoin exchange-traded funds (ETFs) following a recent court ruling in favor of Grayscale Investments. The court found that the securities regulator’s denial of Grayscale’s spot bitcoin ETF application was “arbitrary and capricious.” The SEC chair replied:

We are still reviewing that decision … We have multiple filings around bitcoin exchange-traded products so it’s not just that one you mentioned but it’s multiple others. We are reviewing them and I’m looking forward to the staff’s recommendations.

What do you think about Gary Gensler’s statements? And, do you think the SEC will soon approve a spot bitcoin ETF? Let us know in the comments section below.

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