The SEC’s Chairman Won’t Say Whether Ethereum Is a Security
Ether’s regulatory position remains uncertain, since Gary Gensler has declined to comment on the second-largest cryptocurrency’s status as a security.
During a Monday appearance on CNBC, US Securities and Exchange Commission Chairman Gary Gensler declined to comment on whether Ether is an unregistered security, the central issue in the high-stakes Ripple lawsuit:
We do not participate in these types of public forums, discussing any particular project or probable case, and providing legal advice over the airways in this manner.
According to Gensler, many of cryptocurrency initiatives are attempting to seek capital from the public, but it is critical for them to provide investors with a comprehensive set of disclosures.
The SEC chief also lamented the industry’s lack of compliance, noting that “far too many” cryptocurrency ventures that are securities are attempting to disguise themselves as something else in order to avoid the inconvenience of registering with the SEC:
Unfortunately, far too many of these are attempting to justify themselves by stating, ‘Well, we are not a security. We are nothing more than that.’
Throughout his tenure, Gensler has consistently evaded the same question, arguing that the SEC will not comment on specific cryptocurrencies. The Securities and Exchange Commission’s case against Ripple, alleging that the XRP coin is an unregistered security, is already in its second year.
Additionally, he declined to comment on the ConsitutionDAO initiative, a decentralised autonomous organisation that garnered attention in late 2021. Constitution DAO’s bid was unsuccessful, as rich collector Kenneth Griffin paid $43.2 million for a rare copy of the United States Constitution.
The SEC’s critics frequently contend that it is out of step with modern technologies, considering that the Howey Test, a litmus test for assessing if a particular token is a security, was first used in May 1946.
Gesnler is unconvinced by this reasoning. While crypto tokens are novel, the SEC chairman believes that the fundamental concept of soliciting money from the public and delivering basic disclosures should stay in place. He asserts that it is critical to infuse securities legislation with creativity. At the SEC, our duty is to ensure that you, the public, continue to receive essential protections.