Gary Gensler, Chairman of Securities and Exchange Commission (SEC), recently stated that Bitcoin should be classified as a commodity rather than a security. He refused to comment on how other cryptos are classified, so it is unclear what the status of altcoins such as Ethereum will be.
Bitcoin VS The Rest
Jim Cramer interviewed Gensler Monday about his involvement with the Commodities and Futures Trading Commission in regulating digital assets. Gensler replied with the resounding view that most crypto markets, which are highly speculative asset classes, are made up of securities.
He stated that the investing public was looking for a return just as they do when they put their money into other financial assets, which we call securities.
Gensler said that Bitcoin and other assets can be classified as commodities. He also noted that Gensler’s predecessors were willing to label them as such. Gensler stated, “That’s all I’m going say because I’m avoiding any of these tokens.”
Jay Clayton, the former chairman of SEC, maintained that Ether (the second-largest cryptocurrency) was a commodity during his tenure. Gensler refused to answer CNBC’s January question about the asset’s legal status.
The chairman of Ether asserted that Ether’s ICO was similar to a securities offering when he taught a course on blockchain at MIT in 2018. He claimed it passed the “Howey Test”, which is a simple test that has been used to classify securities since the 1930s.
Gensler offered no comfort to Ethereans, except from an indirect source. Kirsten Gillibrand, a US senator, stated earlier this month in the US that Gensler as well as Rostin Benham, the CFTC Chairman were in agreement that Ether was a commodity. Gensler is still hesitant about the matter, despite Benham having endorsed this claim.
Commodities, Securities, and/or None
The crypto industry is divided on how digital assets should classified. Max Keiser, a devout Bitcoiner, maintains that Bitcoin is the only commodity and all other cryptocurrencies should be classified as securities.
“The overwhelming evidence clearly shows that ETH and Vitalik [Buterin], Joeseph] Lubin… openly discussed ETH (with the intention of being, with the intention, to be, a security,” he stated to CryptoPotato in June.
Some industry leaders believe that crypto assets are not suitable for such a binary classification. Charles Hoskinson, Cardano founder, testified that category-based regulation would be antithetical for crypto because it would depend upon “centralized actors” to report and disclose.
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