At the Securities Enforcement Forum on November 4, Gary Gensler denied that new technological labels alter the realities of securities definitions, specifically calling out decentralized finance and crypto products.
Gensler, who chairs the Securities and Exchange Commission, said:
“Sometimes, people focus on labels. For example, we hear terms like ‘decentralized finance’ (DeFi), ‘currency,’ or ‘peer-to-peer lending.’ It can seem easy to take these words at face value. Make no mistake: regardless of the label or purported mission, we will be looking at the economic realities of a given product or arrangement to determine whether it complies with the securities laws.”
Gensler has made no secret of his belief that many cryptocurrency-based products fall under existing definitions of securities, citing the need to assess based on facts and circumstances, not new taxonomies. This is despite many in the crypto industry asking for specific guidance on, for example, which tokens are and are not themselves securities.
Later, referring to an accusation that many have leveled at the SEC — for example, in the ongoing case against Ripple over XRP issuance — Gensler said: “Some market participants may call this ‘regulation by enforcement.’ I just call it ‘enforcement.'”