SEC Chair Gensler Advocates for Increased Regulatory Clarity in the Cryptocurrency Industry During Legal Symposium
At the Columbia Law School Conference, Gary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC), shared his insights on the current state of the digital currency environment.
Gensler emphasized the critical role of mandatory disclosures in the finance world, injecting a touch of humor by suggesting that certain actors in the cryptocurrency markets prefer to sidestep these legal obligations.
Gensler has repeatedly voiced his concerns about the cryptocurrency industry, pointing out its vulnerability to fraud and unethical practices.
Speaking in Washington D.C., he detailed the significance of enforced transparency and the pivotal nature of securities regulation.
He paid homage to Jack Coffee, a distinguished scholar in securities law, for his work, “Market Failure and the Economic Case for a Mandatory Disclosure System,” which argued against the inefficacy of voluntary disclosure since companies might opt to withhold negative information.
Echoing Coffee, Gensler stressed the myriad benefits that come from investor access to legally mandated disclosures.
He then transitioned to discussing the cryptocurrency sector, invoking a century-old quote by U.S. Supreme Court Justice Louis Brandeis: “Sunlight is said to be the best of disinfectants.” Gensler pointed out the contemporary challenges to the SEC’s disclosure regime, noting that some are advocating for more exceptions to the foundational rules established in the 1930s which mandate public offering registrations and ongoing disclosures.
Highlighting the resistance within the cryptocurrency markets to adhere to these registration requirements, Gensler argued, “No registration means no mandatory disclosure. Many would agree that the crypto markets could use a little disinfectant.”
Gensler concluded with a critique of the cryptocurrency sector, underscoring that Jack Coffee’s insights remain profoundly relevant and have “stood the test of time.”
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