Important point
- Gary Gensler declined to comment on whether Ethereum could be classified as security in an interview with CNBC.
- The SEC Chair reiterated the need to bring cryptographic tokens within the scope of securities regulations.
- The SEC has been criticized for unclear guidelines for cryptocurrencies in recent months.
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SEC Chair Gary Gensler declined to comment on whether Ethereum can be classified as security. CNBC Today’s interview.
Gensler avoids Ethereum security questions
Gary Gensler has shown that he is reluctant to reaffirm the regulatory status of Ethereum.
In an interview on Monday CNBC Skoke box, SEC Chair talked with Andrew Sorkin about the securities law surrounding cryptocurrencies. When Sorkin challenged him about whether Ethereum could be classified as security, he said he wouldn’t talk about a particular crypto asset and wiped out the question. “Can you explain your view on whether Ethereum is security? I think you suggested that it isn’t, but while you believe that Ripple is security, the proceedings related to Ripple It’s in progress, can you talk about the Ethereum issue? “Sokin asked.
“I’m not going to talk about one issue,” Gensler told CNBC. He added that the SEC does not “participate in public forums to discuss one project.”
Gensler’s official position on number two cryptography is in stark contrast to his predecessor, Jay Clayton, who said Ethereum wasn’t security while he was in command of the SEC.
Securities are a means of expressing general corporate ownership in the hope of profit. The question of whether crypto assets like Ethereum can be classified as security has become a hot topic in recent years as space grows. The SEC has been criticized for unclear guidance on cryptocurrencies, but Gensler has stated several times that DeFi tokens may be classified as securities. The SEC has also participated in a publicly announced court battle with Ripple after accusing the company of selling unregistered securities since late 2020. The store is scheduled to close later this year.
In further commenting on the regulatory environment surrounding cryptocurrencies, Gensler said that many crypto tokens could be classified as securities and need to be registered with the SEC. He said:
“Unfortunately, many of these are too many [projects] I’m trying to say, “Well, we’re not security, it’s just something.” I think the facts and circumstances suggest that they are investment contracts, securities and need to be registered. ”
“Cryptographic tokens are funded by the public. They share the same set of disclosures with the public to help the public make decisions and adhere to our truth in advertising. Do you? ” @GaryGensler.. “It’s about bringing them into securities law.” pic.twitter.com/8mvFimxzXV
— Squawk Box (@SquawkCNBC) January 10, 2022
Gensler hasn’t elaborated on his current view of Ethereum’s regulatory status, but told the MIT class that he believes he will pass the test as security when he lectures at college in 2018. At the time, Gensler explained that Ethereum believes it will pass the Howie test, the official framework under the US Constitution to determine if a particular investment is a security offering.
“I think Ether will pass this when it’s done in 2014. [Howey] test. When I say “pass”, it means it’s safe, “he said. He added that the SEC decided to “go the other way” because it determined it was sufficiently decentralized by 2018. In 2014, Ethereum raised $ 18 million in Bitcoin at the first Initial Coin Offering to launch the project.
Gensler lacks the clarity surrounding Ethereum, but claims that Bitcoin is neither then nor today. “Bitcoin was born when mining began as an incentive to validate distributed platforms,” he said in 2018. The SEC subsequently approved the first Bitcoin-related exchange-traded fund associated with Bitcoin futures prices on the Chicago Mercantile Exchange under the leadership of Gensler.
If Gensler refuses to confirm or deny his thoughts on how other crypto assets are classified, it can raise concerns for tech followers. It also suggests that assets built on Ethereum, such as DeFi tokens called by Gensler in the past, may be subject to regulatory action in the future.
It is also worth noting that the SEC’s decision on whether a token is a securities is subject to change. In December 2020, Bitcoin-focused project Stacks stated that it changed its classification from security tokens to non-security after proving that the SEC was sufficiently decentralized.
Disclosure: At the time of writing this, the author of this work owned ETH and other cryptocurrencies.
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Gensler says the SEC cannot and will not ban cryptocurrencies
Gary Gensler, chairman of the USSEC, said regulators have no plans to ban cryptocurrencies in the United States. SEC does not ban cryptocurrencies Gensler states:
