Seemingly unfazed by a recent slew of court setbacks, United States Securities and Exchange Commission Chair Gary Gensler remains headstrong that his agency should be the one to reign over crypto \u2014 with plans to tell lawmakers the same on Sept. 12.\u00a0<\/p>\n
In the last two months, the securities regulator lost out to both Grayscale and Ripple\u00a0\u2014 seen as a huge blow to the regulator. <\/p>\n
In\u00a0his prepared testimony for the Senate Banking Committee hearing, however, Gensler will reiterate the view that crypto assets are in fact securities and should be regulated by his agency. <\/p>\n
\u201cGiven this industry\u2019s wide-ranging noncompliance with the securities laws, it\u2019s not surprising that we\u2019ve seen many problems in these markets. We\u2019ve seen this story before. It\u2019s reminiscent of what we had in the 1920s before the federal securities laws were put in place,\u201d reads Gensler\u2019s prepared testimony. <\/p>\n
Sticking to a consistent theme, Gensler asserted that almost all crypto assets meet the Howey Test \u2014 a legal test which determines whether or not an asset or transaction can be deemed a security. <\/p>\n
\u201cThe vast majority of crypto tokens likely meet the investment contract test.\u201d<\/p><\/blockquote>\n
\u201cGiven that most crypto tokens are subject to the securities laws, it follows that most crypto intermediaries have to comply with securities laws as well,\u201d Gensler added.<\/p>\n
On July 13, Judge Analisa Torres handed down the SEC\u2019s first major legal defeat, after she ruled partially in favor of Ripple. Judge Torres found that the sales of XRP tokens to retail consumers did not violate federal securities laws. <\/p>\n
While the SEC is currently pursuing an appeal of this decision, it’s expected that many other crypto companies staring down lawsuits from the regulator will reference it in their respective dismissal motions. <\/p>\n
Related: <\/em><\/strong>Ripple lawyer calls SEC\u2019s latest filing \u201chypocritical pivot\u201d<\/em><\/strong><\/p>\n
On Aug. 29, the SEC suffered its second major loss against Grayscale over the prior rejection of its request to convert its over-the-counter Bitcoin Trust into a Bitcoin exchange traded fund (ETF). Without mincing words, the judge declared that the SEC\u2019s rejection of Grayscale\u2019s request was \u201carbitrary and capricious.\u201d<\/p>\n
These high-profile losses appear to have inspired an appeal from blockchain-based payments network LBRY, who was found guilty of violating securities laws in July. <\/p>\n
On Sept. 7, LBRY filed a notice of appeal against the ruling, a move that has reversed its previous decision to wind down and shown that it will choose to fight the court ruling that sided with the SEC.<\/p>\n