Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), still won’t give a straight answer on whether Ethereum (ETH) legally classifies as a security.
During a Thursday interview with Bloomberg, the chairman was asked to clear the regulatory fog surrounding the second-largest cryptocurrency, given that Ethereum spot ETF applications are now piling up on his agency’s desk.
Why Won’t Gensler Answer?
Gensler’s response was, as usual, vague – and re-directed listeners to the near-century-old legal precedent established called the Howey Test.
“On any one of these crypto tokens, it’s about the facts and circumstances as to whether the investing public is anticipating a profit based on the efforts of others,” he said seemingly amused after receiving another “crypto question.”
“We do have filings in front of us – I’m not gonna comment,” he added.
Gensler’s hesitancy to answer fuels an era of crypto market confusion dating back to 2018 when former SEC Director William Hinman published a speech espousing his personal view that Ethereum classifies as a commodity, rather than a security.
Since then, Gensler and the agency have denied making any official statements or proclamations regarding their views on ETH and avoided the question numerous times when asked.
They’ve also alleged that dozens of other top cryptos including Solana (SOL) and Cardano (ADA) are securities in lawsuits against leading crypto trading platforms including Coinbase and Binance.
There’s reason to believe the agency views ETH differently, however. Much like Bitcoin, the SEC has approved trading of CME Ether futures. According to Bloomberg ETF analyst James Seyffart, this implies that the asset is viewed as a commodity already.
Moreover, the Commodities and Futures Trading Commission (CFTC) chairman Rostin Benham has explicitly labeled ETH as a commodity for years, with several crypto-supportive members of Congress taking his side on the matter.
Testifying before a House committee on Wednesday, the chairman said that Prometheum – an SEC-approved crypto broker – could create more regulatory uncertainty if the SEC allows it to classify ETH as a security on its platform. He is working closely with Gensler on the matter.
“It would then put our registrants – our exchanges who list Ether as a futures contract – in non-compliance with SEC rules as opposed to CFTC rules,” Benham explained.
Crypto Is Still A Speculative Place
Though avoiding the actual question, Gensler made sure to re-emphasize that crypto is a “highly speculative asset class,” referencing Bitcoin’s volatility over the past week. He said:
“You should be conscious as the investing public that this is a bit of a rollercoaster ride on these volatile assets, and then the question is, how firms it the foundation?”
Upon approving Bitcoin spot ETFs to trade on public markets in January, Gensler noted that the SEC’s approval was “not an endorsement of Bitcoin,” and claimed that the asset is often used for financial crime.
Bitcoin is up 53% since the start of the year, briefly touching a new all-time high of $69,200 on Tuesday.
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