Although acknowledging the vulnerability of the crypto market to fraudulent operations, Gary Gensler refuted the idea that identifying the issuers of crypto assets is impracticable and emphasized the very modest share of the market in the $110 trillion economy.

The U.S. Securities and Exchange Commission (SEC) has rejected Coinbase Global's application to establish new rules tailored to the digital asset industry. Leading cryptocurrency exchange Coinbase has argued that the current U.S. securities laws are insufficient for the crypto business and has pushed for specific regulations. However, SEC Chair Gary Gensler expressed his disapproval in a letter to Coinbase's chief legal officer, arguing that the present securities laws do not apply to the cryptocurrency sector.

Gensler emphasized that current rules already apply to bitcoin securities markets in a statement posted on the SEC's website. He referred to the Supreme Court's Howey test's flexibility, pointing out that federal courts had successfully applied it to crypto assets. He refuted the idea that it is impossible to identify the "issuer" of bitcoin securities, emphasizing the need for openness and investor protection.

The Chair of the SEC emphasized that the Commission is still working to develop regulations for the cryptocurrency securities markets. In contrast to Coinbase's assertion that this is the right time for government action, Gensler mentioned current programs such as the Special Purpose Broker-Dealers Release, which gives broker-dealers that deal in securities related to cryptocurrency a five-year window of time. 

In addition, he discussed upcoming laws and enforcement actions pertaining to digital assets, highlighting the significance of flexibility in the face of shifting market conditions. It was emphasized that maintaining the Commission's independence is essential for allocating funds effectively and establishing regulatory priorities. Gensler noted that the cryptocurrency market is a small part of the greater $110 trillion financial markets, despite its susceptibility to fraud and noncompliance.

The Commission's capacity to use discretion is essential for taking a focused approach to industries that need new regulations. Gensler concluded by saying that, notwithstanding the obstacles, significant participation, registration, and rule compliance are essential for protecting investors and upholding market integrity. The SEC rejected the petition because it believes that the current securities laws adequately regulate crypto asset securities and guarantee complete transparency and fair competition for all market participants.