SEC’s Gurbir Grewal says ‘we’re not giving crypto a pass’ on enforcement action

Gurbir Grewal, director of enforcement at the United States Securities and Exchange Commission, said despite the narrative of “picking winners and losers” and “stifling innovation,” the financial regulator is investigating and bringing enforcement action against crypto companies.

In written comments for a Friday program hosted by the Practicing Law Institute, Grewal pushed back against criticism that the SEC’s enforcement actions are “somewhat unfairly targeted” compared to those against financial products or traditional markets. He also hinted that the SEC was responsible for many “non-white and low-income investors” attracted to crypto projects, the financial system and its regulators “failed, or simply ignored, them.”

“It often seems that critics are upset because we don’t give crypto a pass from the implementation of well-established rules and precedents,” Grewal said. “Just as we should easily deflect criticism or difficult questions, if we don’t investigate and bring up the relevant issues, we would be operating out of fear and favor.”

The SEC Enforcement Director added:

“Failure to enforce the most basic rules under our regulatory framework is a breach of trust and is not an option for us. […] Regardless of which account is used or whether technology is involved (or not), we continue to bring actions. Failure to do so would be shirking our responsibility.

Officials appointed Grewal as SEC enforcement chief in July. Representative Brad Sherman later criticized the regulator, saying before the House Financial Services Committee that Grewal should show “strength and courage” as enforcement director and not “small fish” in going after major crypto exchanges. Complaint against a former Coinbase employee, labeling nine tokens as “crypto asset securities” in an apparent effort to regulate digital assets through enforcement actions.

Related: Crypto Sanitation: How Much Enforcement Is Too Much?

Speaking at the same Practicing Law Institute event on Thursday, SEC Chairman Gary Gensler said he would welcome legislation aimed at expanding the powers of the Commodity Futures Trading Commission “as long as it does not forcefully circumvent securities laws.”