In a recent statement, Gary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC), expressed his strong views on the operations of cryptocurrency exchanges within the country. Gensler firmly believes that the entire business model of the crypto industry is founded on non-compliance with regulations.

During an interview with CNBC, the prominent American securities regulator made a bold statement, asserting that there is no need for additional digital currencies. He further criticized crypto exchanges for engaging in various functions that would not be deemed acceptable in traditional financial systems. Gensler drew a hypothetical parallel between the New York Stock Exchange operating a hedge fund, emphasizing the incongruity of such practices.

Gensler highlighted that the United States already has digital currencies in the form of the U.S. dollar, euro, and yen, which are all digitalized. His comments came in the wake of the SEC’s lawsuit against Coinbase, the largest cryptocurrency exchange in America. The SEC alleges that Coinbase failed to register as an exchange, clearinghouse, and broker, and also accuses the company of selling unregistered securities.

Furthermore, the SEC recently filed 13 civil charges against Binance, the world’s largest digital asset exchange. The charges accuse Binance and its CEO, Changpeng Zhao, of exhibiting a blatant disregard for American federal securities laws, particularly through the misuse and commingling of customer funds.

Since assuming the role of SEC Chair in 2021, Gary Gensler has intensified regulatory actions against the crypto industry. The crackdown gained momentum following the collapse of FTX, a digital asset exchange, due to alleged criminal mismanagement. Prosecutors claim that FTX commingled customer funds with its sister trading firm, Alameda Research, to engage in risky investments.

During a keynote speech at the 2023 Financial Markets Conference, organized by the Atlanta Fed, Gensler addressed the criticism that the SEC has not provided sufficient guidance for crypto companies seeking compliance with federal law. He vehemently defended the SEC, stating that the necessary rules have already been published and the commission is ready to assist crypto startups facing enforcement actions.

In recent months, the SEC has targeted several U.S. crypto exchanges, including Kraken, Bittrex, and Coinbase, for allegedly trading unregistered securities. However, the regulatory crackdown has sparked concerns among some lawmakers, primarily Republicans, who argue that the stricter rules and lack of clarity may impede innovation in the nation’s largest economy. Representative Warren Davidson (R-OH) is among the lawmakers who have criticized Gensler’s handling of the SEC, announcing plans to introduce legislation to remove him from his position.