SEC Chairman Gary Gensler made headlines by avoiding a direct answer as to whether or not he believes Ethereum’s native cryptocurrency is a security. Instead, he took the opportunity to reiterate his presentation of a more inclusive regulatory environment for the crypto sector.
Gensler failed to clarify the position of the aether
Gensler’s failure to answer the question regarding Ethereum’s regulatory status highlights the importance of the issue. As a professor at the Massachusetts Institute of Technology in 2018, he noted that ether should be considered a security as it sees the light of day through an ICO.
“I think Ether when he was done in 2014, he would have passed on this [Howey] Test. He said at the time when I say “Pass, it means it’s safe.”
Not confirming his previous position on the world’s second largest digital currency isn’t the only thing wrong with this position. Gensler’s response could have provided great clarity as to whether he had a unifying view of crypto assets.
Ripple-SEC Legal Case
Analysts believe that Gensler has avoided repeating his previous stance on Ethereum due to the ongoing SEC-Ripple legal dispute as the Commission accused the payment processor of selling unregistered XRP securities.
In the highly publicized legal battle, Ripple maintains that its tokens are not securities. Unlike the Ethereum ICO, Ripple was launched with funds from Venture Capitalists.
It is worth noting that Gensler’s predecessor, Jay Clayton, during his tenure emphasized that Ethereum was not a guarantee.
When asked by Andrew Sorkin if he thinks Ethereum should be considered as collateral, Gensler said, “I won’t speak to any matter.” He added that the SEC “will not participate in public forums to talk about any single project.”
A plan to strengthen cryptographic regulations
Currently, most crypto assets are subject to the Commodity Futures Trading Commission (CFTC), where regulations are relatively lax. But as the market has expanded exponentially in terms of value and customer base in the past few years, the American rangers have pushed hard for greater regulation.
Classification of digital assets will place them under the supervision of the Securities and Exchange Commission, which has a much stricter regulatory framework.
Since April, when Gary Gensler was sworn in as a member of the commission, he has made clear on several occasions that greater regulation of cryptocurrency is needed to protect investors.
He argued that trading platforms could benefit from enhanced credibility by subjecting themselves to regulation, particularly tax laws, insider trading and money laundering laws.
If cryptocurrency exchanges are collecting money from the public and if the public is investing in anticipating profit based on their promises, then it is within the securities laws,” Gensler said during an interview on Monday.
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