A former US Government regulator and Goldman Sachs partner, Gary Gensiern believes that unlike Bitcoin, the other major altcoins Ethereum (ETH) and Ripple (XRP) should be considered unregistered securities.

From the point of Commodity Futures Trading Commission (CFTC) that was being headed by Gary Gensiern during the Obama administration, the main feature distinguishing Bitcoin from the rest of cryptocurrency wagon despite its relatively highest market price, is that Bitcoin was never issued through an Initial Coin Offering (ICO) and has a decentralized network of developers thus it ultimately cannot be classified as security.

On the other hand, its two archrivals Ethereum (ETH) and Ripple (XRP) have been sold by their creators and purchased primarily as investments for speculative reasons and therefore were deemed as ‘’noncompliant securities’ by regulators, which means that according to delivered statement ICOs eventually must comply with securities, commodities and derivatives laws in the U.S. and around the globe. Such a determination could subject a wide swath of industry members to legal penalties and once again lead to nothing but growing regulators’ involvement in the crypto-space.

Clearly none could be surprised that Gary Gensiern was the one who bring a question of crypto being securities on agenda. After working at Goldman Sachs, Gensler served as one of the top financial regulators in President Obama’s administration, as well as the finance chief for Hillary Clinton’s 2016 presidential campaign. The New York Times reports that Gensler will be joining the Massachusetts Institute of Technology (MIT) to teach a course on Blockchain, both lecturing at the MIT Sloan School of Management, as well as being a special advisor to the Media Lab, which contains the Digital Currency Initiative.

During his talk at the MIT Technology Review Business of Blockchain, Gary Gensiern went down on Ethereum (ETH) and Ripple (XRP) saying:

“Because bitcoin came into existence as mining began as an incentive in validating a distributed platform. No initial token offerings, no pre -mined coins, no kind of common enterprise under that Howey Test. But what about ether and ripple? And you can go down. I’m not trying to pull these out, it’s just these are the big five. These all seem to have attributes of that Howey Test. Was money given over in 2014 for ether, bitcoin for ether? Was money given to ripple every month they sell another bit of it out of the escrow?”

Nevertheless, Gensler ended up denying that Ethereum can be considered any kind of security since for as long as three years of its function, it has achieved a more decentralized development structure and it has a greater chance of evading the “noncompliant securities” label than XRP and most ICOs.

XRP, in turn, was created by San Francisco-based blockchain startup Ripple, and the company used to issue tokens at its own discretion through sales, grants, and other centralized means. Ripple has repeatedly claimed that XRP is not a security, though cryptocurrency exchange operator and brokerage firm Coinbase has suggested that it does not believe there is regulatory certainty that prevents it from listing the token and so does Gary Gensiern.

In response to Gensler’s claims, Ripple spokesperson Tom Channick told The New York Times that XRP is not a security because it “does not give its owners and interest or stake in Ripple, and they are not paid dividends. XRP exists outside of Ripple, was created before the company and will exist after it.”

In the meanwhile, Gary Gensiern concluded that blockchain technology will eventually change the traditional financial system, but not without some adjustments in the crypto sphere. He believes ongoing year will bring a reckoning for the cryptocurrency industry, as regulators continue to take a more proactive role in regulating ICOs and other token sales that allegedly constitute unregistered securities offerings in order to protect investors and prosecute fraud.

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