In a recent interview with New York Magazine, Securities and Exchange Commission (SEC) Chair Gary Gensler hinted that he believes Ethereum (ETH) could be classified as a security.
Gensler stated that cryptocurrencies other than Bitcoin are typically created by a group of entrepreneurs who use various opaque mechanisms to promote their tokens and attract investors. He argued that at their core, these tokens are securities, as investors are hoping to profit based on the efforts of intermediaries.
He argued that, as a legal matter, such tokens are securities, which fall within the SEC's jurisdiction.
Gensler's previous comments about Ethereum indicated that he was unwilling to comment on the issue of whether Ethereum is a security.
In 2021, he also weighed in on the regulatory status of stablecoins. He believes that stablecoins that are linked to a traditional currency or commodity, such as the U.S. dollar, should be classified as securities. In contrast, stablecoins that are backed by cryptocurrencies are less clear and could be classified as commodities.
Gensler's comments differ from those of CFTC Chair Rostin Behnam, who views Ethereum as a commodity. Behnam has repeatedly stated his position, including at a symposium in October 2022, where he claimed that Gensler held a different opinion on the matter.Gensler had previously suggested that Ethereum could be classified as an unregistered security in 2018 while teaching at MIT.
The SEC boss has previously criticized cryptocurrency projects that tried to masquerade as something else to avoid registering with the SEC. He argued that many cryptocurrency projects that are securities are trying to claim they are not, which he believes to be unfortunate.
Despite the criticism the regulatory agency has faced for being seemingly out of step with modern technologies, Gensler maintained that the basic idea of raising money from the public and providing them with basic disclosures should remain in place, even for crypto tokens.
According to Gensler, it is important to bring innovation into securities laws while ensuring that the public still receives basic protections.