During a Senate Appropriations Committee hearing today, SEC Chairman Gary Gensler cautioned that the controversial practices observed at the now-defunct crypto exchange FTX are not isolated incidents within the industry.

"It’s not unique," Gensler remarked regarding FTX’s blending of functions. "Similar issues have arisen in multiple instances."

Gensler underscored the distinctions between traditional stock exchanges and crypto platforms, noting that the latter often engage in activities that would be prohibited in the former.

"The NYSE, for instance, cannot simultaneously operate a hedge fund, trade against its customers, or preempt its customers in market activities. Yet, in the crypto sphere, such commingling of functions is widespread," he explained.

Senator Bill Hagerty expressed concerns about regulatory uncertainty in the United States, suggesting it has driven crypto exchanges to operate offshore. Gensler disagreed, asserting that this choice reflects an attempt to avoid compliance with US laws, which safeguard capital markets.

Gensler reiterated that the majority of crypto tokens fall under existing securities regulations and criticized crypto exchanges for inadequate disclosures.

He concluded, "There’s a distinction between breaking the law and disagreeing with it; I believe much of the issue lies in the latter within this field."