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Gensler: Crypto Enforcement Due to Widespread Noncompliance

SEC Chair Gary Gensler will testify before the U.S. Financial Services Committee, discussing the SEC’s adaptation to technological advancements, particularly in the crypto and AI sectors.

Gensler will emphasize the SEC’s efforts to align its regulations with the evolving technology landscape, outlining its broader oversight responsibilities in the U.S.

The cryptocurrency sector will receive special attention, with a focus on predictive data analytics and crypto assets. Gensler will stress the need for investor protection within crypto asset markets, suggesting that most crypto tokens likely fall under securities laws.

He will also assert that intermediaries, including exchanges, brokers, and dealers, must comply with securities laws, given the SEC’s view on most cryptocurrencies.

Gensler will acknowledge “wide-ranging noncompliance with the securities laws” in the crypto industry, leading to enforcement actions. The SEC has addressed these issues through rulemaking, including guidelines for platforms trading cryptocurrencies, including DeFi protocols.

Predictive data analytics and AI will be highlighted as transformative technologies, offering increased efficiency but also posing risks of conflicts of interest that need to be addressed.

Gensler may or may not comment on ongoing legal battles involving U.S.-based cryptocurrency exchanges Coinbase and Binance.US, which face allegations of securities law violations.