Gary Gensler, chair of the U.S. Securities and Exchange Commission (SEC), has issued a new warning to the %Cryptocurrency sector concerning regulation of the industry.
In a video posted on Twitter, Gensler said that the rules governing digital assets are clear and must be obeyed by crypto entities.
Specifically, Gensler said that cryptocurrency exchanges such as %Coinbase ($COIN) and others must treat crypto like other securities such as stocks and stop acting as if the regulations are ambiguous or don’t apply to them.
“The law is clear,” Gensler said. “If you’re a securities exchange, clearinghouse, broker, or dealer, you must come into compliance, register with us, and deal with conflicts of interest and disclose important information.”
The regulator’s comments come after crypto exchange Coinbase launched a lawsuit against the SEC seeking that the agency be forced to publicly share its answer to a petition on whether it would allow the crypto industry to be regulated using existing securities laws.
Coinbase has been arguing that the SEC has been inconsistent in how it treats crypto, and that the industry needs regulatory clarity to move forward.
In recent months, the SEC has taken action against several crypto exchanges, including Bittrex and Gemini, as well as cryptocurrency lender Genesis.
The SEC has accused those businesses of manipulating cryptocurrency asset prices.
Gensler titled his latest Twitter video “Office Hours” and argued in it that what cryptocurrency exchanges are doing is selling securities similar to stocks.
“Intermediaries for investment contracts, whether they’re exchanges, brokers, dealers, clearinghouses, they need to comply with the securities laws and register with the Securities and Exchange Commission,” he said in the video.
Gensler said that by not complying with current SEC regulations, the platforms “don’t have basic investor protections,” which is leading to clients being unable to access their funds when problems arise.
In a rebuttal to Gensler’s video, Coinbase chief executive officer (CEO) Brian Armstrong said that the comments made by the SEC chair are “not good for America.”
Coinbase’s stock is down 56% in the last 12 month and currently trading at $54.17 U.S. per share.