By
Svetlana Soroka
April 26th, 2024
The SEC chair previously indicated that all cryptocurrencies apart from BTC are securities.
In a recently unearthed video from a 2018 crypto-themed event hosted by Bloomberg and Fidelity, Gary Gensler, the current chairman of the United States Securities and Exchange Commission (SEC), made statements that contradict his current position on digital assets regulations in the country.
The video, which started circulating on Twitter on June 12, shows Gensler addressing institutional investors at the Massachusetts Institute of Technology, where he worked as a professor before joining the SEC in 2021 after he was nominated by President Joe Biden, asserting that four major cryptocurrencies, Bitcoin (BTC), Ethereum (Ether), Litecoin (LTC) and Bitcoin Cash (BCH) are not securities.
At the time, the SEC chairman highlighted that these four digital assets accounted for approximately 75% of the market, emphasizing their exclusion from the securities category.
“Over 70% of the crypto market is Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. Why did I name those four? They’re not security. Three-quarters of this [digital asset] market are not securities,” the SEC chair said in the video.
Chair Gensler in 2018 at a Bloomberg conference in NYC:
“Bitcoin. Ether. Litecoin. Bitcoin Cash. Why did I name those four? They’re not securities.”
What’s Goldman Gary going to say about this one? Deep fake? pic.twitter.com/p7DJlYkJIt
— Ryan Selkis 🪳 (@twobitidiot) June 12, 2023
Gensler’s 2018 Comments Come from a Personal View
Gensler’s remarks in the video have sparked controversy, as the comments contradict his recent suggestions that most cryptocurrencies, aside from BTC, may be considered securities.
Although legal experts such as crypto lawyer Preston Byrne have clarified that Gensler’s 2018 comments were made in a personal capacity, the remarks have raised concerns within the crypto industry.
Critics argue that his lack of clear guidance on the legality of specific tokens before initiating a “regulation by enforcement strategy” without a clear path for compliance has created uncertainty and frustration among the crypto community.
Last week, the market regulator labeled 19 more crypto assets as securities, including Solana (SOL), Polygon (MATIC), Flow (FLOW), and Near (NEAR), making it a total of 68 digital currencies the Commission has identified as security under Gensler’s leadership. However, none of the crypto assets mentioned in the 2018 video have yet made it to the SEC’s list.
Is Ethereum a Security or Not?
The SEC chair previously indicated that all cryptocurrencies apart from BTC are securities. On that note, the Commission has sued many crypto companies, including Coinbase, Ripple Labs, Binance, Gemini, and Genesis, for violating federal securities laws by selling unregistered securities in America.
In April, Patrick McHenry, chairman of the US House Financial Services Committee, requested that Gensler provide a clear answer as to whether Ethereum is a security. Still, the SEC chair failed to answer the question definitively.
That same month, another video of Gensler from 2019 emerged before his time at the SEC. In the video, he praised the smart contract platform Algorand for its underlying technology before declaring its native token ALGO security in a lawsuit against the crypto exchange Bittrex.
Earlier in March, the SEC chairman disclosed that Ether could be a security after the Ethereum Merge, referring to the protocol’s transmission to a proof-of-stake (PoS) consensus mechanism last year.
At the time, Gensler argued that all PoS tokens could be classified as a security under the Howey Test, used to measure assets that meet the security requirements.
According to him, users’ profits from staking on such protocols indicate that the tokens are securities and should be regulated under the SEC purview.
“Whatever they’re promoting and putting into a protocol, and locking up their tokens in a protocol, a protocol that’s often a small group of entrepreneurs and developers are developing, I would just suggest that each of these token operators seek to come into compliance, and the same with the intermediaries,” he said.