Ether’s security status remains unclear as SEC chairman Gensler won’t answer lawmakers’ questions – Regulation Bitcoin News

The chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, would not answer a direct question in a congressional hearing about whether ether is a security. While the SEC chairman insisted that the law is ready for crypto, Congressman Patrick McHenry claimed that the SEC’s regulatory actions say “there is a lot of uncertainty.”

Lawmakers are probing SEC Chairman Gary Gensler on whether Ether is a security

US Securities and Exchange Commission (SEC) Chairman Gary Gensler testified Tuesday before the House Financial Services Committee on oversight of the SEC. During the hearing, the committee’s chairman, Congressman Patrick McHenry (R-NC), asked the SEC chief whether ether (ETH) is a commodity or a security.

McHenry explained that back in 2018, Bill Hinman, who was the director of the SEC’s Division of Corporation Finance at the time, stated that ether was not a security. Last month, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam expressed his view that ether is a commodity, he continued, adding that the New York attorney general argued in a lawsuit last month that ether is a security. . “Clearly an asset cannot be both a commodity and a value, don’t you agree?” Legislator Gensler asked.

The SEC chief responded:

In fact, all securities are commodities under the Commodity and Exchange Act. It is that we are excluded goods, but I agree that a security cannot also be an excluded good and an included good.

“How do you categorize ether then?” McHenry asked Gensler. When the SEC chairman tried to give a generic answer about securities laws, the congressman pressed: “I’m asking you, as you sit in your chair now, to make an assessment, under the laws that exist, whether ether is a commodity or a security ? “

While Gensler insisted he won’t discuss any specific tokens, the congressman pointed out that the SEC chief has already talked about one token, bitcoin, and is now being asked to talk about ethereum. Gensler previously said that all crypto tokens, except for BTC, are securities, but would not name any other tokens specifically.

Disregarding the lawmaker’s question about ETH specifically, Gensler emphasized that there are 10,000 to 12,000 crypto tokens and went on to give the same general explanation that he has said many times:

If there is a group of entrepreneurs raising money from the public in anticipation of profits based on…

McHenry cut Gensler off mid-sentence and repeated this question: “I’m asking about one. I have a specific question, Chairman Gensler. I said this privately. It should come as no shock to you that I ask this question. Is ether a commodity or security?”

Gensler replied:

And again, it depends on the facts and the law and whether it’s a group…

“I’m asking about the facts and a law sitting in your seat and the judgment you’re making,” the congressman repeated his question after cutting Gensler off mid-sentence again.

“Mr. Foreman, I don’t think you want me to prejudge,” Gensler insisted.

“But you’ve prejudged this. You’ve taken 50 enforcement actions. We’re figuring it out as we go, as you file suit, as people get Wells notices of what is a security in your view and your agency’s view. I put you a very simple question about the second largest digital resource. What’s your view?” Gensler replied:

My view is if there is a group of individuals in the middle that the audience is in…

McHenry cut Gensler off mid-sentence again and proceeded to ask his next question.

“Let me just ask a second question. Do you think it serves the market for an object to be viewed by the commodity regulator as a commodity and the securities regulator as a security? Do you think it provides safety and soundness for the product? Do you think it provides consumer protection? Do you think it serves the value of innovation? I think ‘no’ should be a very easy answer for you here,” McHenry told Gensler. “Uncertainty is bad, isn’t it?”

When the committee chair confronted Gensler about not answering his ETH-specific question, the SEC chief replied, “I’m answering it generically because you don’t want me to talk about one set of facts and circumstances.”

The legislator continued: “Let me just go back. There is a lack of clarity here in the market. Can you at least agree to that?” Gensler replied:

I think the clarity is there. The law is clear.

“Okay, let me be clear about this. The market doesn’t see it. Your regulatory actions and the CFTC’s regulatory responses say there is a lot of uncertainty here. It is the intention of this committee to fix this uncertainty and actually provide a good legal basis for this, McHenry emphasized.

Many people have complained that the SEC, under Gensler, is taking an enforcement-centric approach to regulating the crypto sector. Congressman Warren Davidson recently revealed that he is introducing legislation to remove the chairman of the SEC for “a long list of abuses.”

What do you think about SEC Chairman Gary Gensler dodging the congressman’s question about whether ether is a security? Let us know in the comments section below.

Kevin Helms

A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of finance and cryptography.