In his testimony, Gensler said, “The whole crypto field is built on models we wouldn’t allow in traditional securities markets.”

During a Senate committee hearing, SEC Chair Gary Gensler labeled cryptocurrencies as a highly speculative asset class and criticized the industry for being filled with fraud and scams. He highlighted that the crypto field operates on models that would not be permitted in traditional securities markets and expressed concerns about the harm it has caused to many Americans.

When asked about the prevalence of crypto investments among Americans, Gensler stated that the SEC had not conducted a survey on the matter but was aware of other relevant surveys. He acknowledged the substantial losses from cryptocurrency scams but noted that the actual figures might be even higher. (CIO)

Senator Bill Hagerty voiced apprehensions about the SEC’s regulatory approach, which relies heavily on enforcement, as it may push crypto companies to relocate to other countries. Instead, Hagerty suggested establishing clear rules for the crypto market.

Gensler further criticized some crypto firms for adopting a “catch-us-if-you-can” business model and exploiting the public’s desire for financial security. While he previously argued against the need for new rules, he emphasized the importance of bringing the cryptocurrency industry into compliance.

Notably, Gensler’s forceful testimony coincided with the SEC’s acceptance of six applications for Bitcoin-based ETF reviews from major investment firms. He clarified that Bitcoin is likely not a security, unlike most other cryptocurrencies, as it does not function as an investment contract.

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