Key takeaways:
- SEC Chair Gary Gensler refused to state directly whether Ether, the native cryptocurrency of the Ethereum blockchain, is a security or a commodity.
- The crypto community was quickly alarmed by Gensler’s lack of transparency.
In a congressional hearing, Gary Gensler, the head of the U.S. Securities and Exchange Commission (SEC), refused to directly respond to the topic of whether ether is a security.
The argument occurred during Gensler’s Tuesday testimony before the House Financial Services Committee. Gensler was selected by President Joe Biden to be the SEC’s new chairman. There is a lack of clarity around how ethereum should be regulated, according to Committee Chairman Patrick McHenry (R-NC), but Gensler consistently disagreed.
It seems that the Securities and Exchange Commission casts a long, gloomy shadow over Crypto’s activities every week, and the latest move offers no exception.
Actually, according to the Commodity Exchange Act, all securities are commodities. It’s because we’re not considered commodities. Gensler retorted, “But I would concur that a security cannot be both an excluded item and an included commodity.
In answer to a question from Wisconsin Rep. Bryan Steil, he added, “I don’t own any crypto assets… [but] all of my securities holdings are actually digital because they’re held by a broker-dealer.”
According to Gensler, neither his team members nor the subject-matter specialists who give him advice believe they do.
Many observers contend that the chairman’s evasiveness demonstrates how the SEC is improvising as it goes along, bringing enforcement and litigation actions virtually arbitrarily, without offering crypto, startups, and projects a clear path to complying with the law.
“So how do you classify ether?” McHenry asked Gensler a question. The congressman continued, “I’m asking you, sitting in your chair now, to make an assessment, under the laws as they exist, is ether a commodity or a security?” after the SEC chair tried to give a general response concerning securities rules.
While there is validity to this claim, Gensler’s evasiveness during this week’s hearing before the House Financial Services Committee of the United States suggests that there may be other options.
Recently, Letitia James, the attorney general of New York, made history when she argued in court that Ethereum is a security in a case against cryptocurrency exchange KuCoin.
