SEC’s Gensler won’t say whether ether is a security, amid crypto market slide

As Professor at MIT, Gary Gensler argue In 2018, the creators of the cryptocurrency ETHUSD managed to
You violated federal law when they issued $18 million worth of tokens without registering them as securities with the SEC.

Today, as Chairman of the Board of Directors of the Securities and Exchange Commission (SEC), Gensler will not say whether he has revised these beliefs, or whether he believes that the second most valuable cryptocurrency after Bitcoin is still safe — a question whose answer could have implications. extensive coverage of the entire cryptocurrency economy, including huge exchanges such as Coinbase COIN,
and FTX.

In an interview Monday with CNBC, Gensler said in response to a question if he thinks ether is insurance. “I am the chair of a five-member panel that is also a civilian law enforcement agency, so we don’t participate in these kinds of public forums where we talk about any one project, one possible circumstance, and give legal advice on the airwaves.”

Gensler previously said that he believes that US securities and case law make it clear which digital assets are securities, and that most current tokens are being offered to the public in violation of the law.

An important set of conditions for determining whether an asset is a security is the so-called Howey test, which states that an instrument is a security when it is “a contract, transaction, or scheme in which a person invests money in a joint venture, and results in an expectation of profits only from the efforts of promoter or third party.

The relevant question for cryptocurrencies is whether they are in fact a “combined enterprise”. William Henman, a former director of corporate finance at the SEC, said in a speech in 2018 that Bitcoin BTCUSD,
Ether developers have not been sufficiently centralized for these currencies to meet this definition. But this letter is not an official directive, and Hinman is no longer with the Securities and Exchange Commission.

The debate over whether ether should be considered a security is particularly prominent given the SEC’s ongoing lawsuit against Ripple Labs Inc. and two of its executives, the issuer of the XRP XRPUSD cryptocurrency,
Ripple said in response to the SEC lawsuit that there is “no principled distinction” between his “current job and that of [bitcoin or ether]. ”

Gensler, a Democrat, declined requests to explain why the Securities and Exchange Commission considers XRP to be a security, but not bitcoin or ether, and this lack of clarity angered both crypto boosters and Republican commissioners in the five members. SEC.

In July, commissioners Hester Peirce and Elad Roisman issued a public statement protesting their colleagues’ unwillingness to provide more detailed guidelines that would enable crypto entrepreneurs to better understand the differences between assets such as XRP, bitcoin and ether.

The value of the high-profile cryptocurrency has been hit hard in recent weeks amid fears of a hike in interest rates. The price of bitcoin in dollars has fallen more than 17% over the past month, and ether is down more than 25%, according to data from Kraken.