“Bitcoin Is The Only One I’m Willing To Say Is A Commodity”, SEC Chair Says On Crypto Regulation
The U.S. Securities and Exchange Commission (SEC) Chairman Gar Gensler hinted at what could be the future of Bitcoin and crypto regulation in this country. In an interview with CNBC’s Market Alert, Gensler once again spoke about the “volatile” and “speculative” nature of the digital asset class.
The SEC Commissioner has been making similar statements since the start of his mandate in 2021. Gensler has compared crypto with the “Wild West” and believes consumers should be protected when participating in the sector.
Gensler is well-known for teaching a class on Bitcoin and cryptocurrencies at the Massachusetts Institute of Technology (MIT) before being appointed as SEC Chair. Thus, crypto investors saw him as potentially someone that could pivot regulations in favor of the industry. Many have been disappointed.
In the interview, Gensler stated that 99% of the “hundreds of tokens” in the crypto market offered investors “a return” which is one of the conditions that any assets must meet to be deemed a security. This would make them fall under the SEC’s jurisdiction. Gensler said:
The investing public is hoping for a return, just like when they invest in other financial assets. We call (this financial assets) securities, and many of this crypto financial assets have the key attributes of a security. Some of them are under the Securities and Exchange Commission (jurisdiction).
The latter has been a major item of controversy within the U.S. government and the crypto market. The SEC has been fighting to gain more jurisdiction over the nascent asset class, based on the argument stated by Gensler, from its sister agency the Commodity Futures Trading Commission (CFTC).
If an asset is a security, investors and related companies must comply with the SEC regulations. If an asset is a commodity, it is regulated by the CFTC and investors must comply with a different set of rules and regulations. Thus, why the crypto industry has been trying to get a clear classification for the nascent asset class for years.
A Legal Purgatory, Gensler Emphasizes Bitcoin Status
The U.S. CFTC classifies Bitcoin and Ethereum as commodities and has claimed jurisdiction over these digital assets. The SEC and its Chairman seem ready to push on and finally gain jurisdiction over the entire crypto space, including the very disputed Ethereum. Gensler added:
Some like Bitcoin, and that is the only one I’m going to said, my predecessor have said it is a commodity (…).
If the SEC gains jurisdiction over Ethereum, the network that hosts a major part of the decentralized finances (DeFi) sector, the crypto industry could be forced to comply with its regulations and operate in a different fashion.
In the past, the CFTC has always pushed back the SEC back as they consider ETH a non-security commodity, as stated by former CFTC Chair Brian Quintez:
A futures contract on a security is in both the SEC’s and CFTC’s jurisdiction. A futures contract on a pure commodity is only in the CFTC’s jurisdiction. There is a currently a futures contract on #ETH. It is only under the CFTC’s purview which makes ETH a non-security commodity.
Quintenz has since departed from his role in the Commission, and with Gensler’s statements today, it seems unclear whether the CFTC will finally cave in and surrender jurisdiction to the SEC. The crypto industry has been looking for legal clarity, and this might be a hint that things could be moving in that direction.
However, Eleanor Terrett, a journalist at Fox Business, claims Gensler has acknowledged Ethereum is a commodity with high U.S. government representatives. In that sense, she claims the SEC seems “confused.”
This is the second time in a month @GaryGensler has stated #Bitcoin classifies as a commodity that should fall under the jurisdiction of the @CFTC.He says "my predecessors and others have said they are a commodity." His predecessors also said #ETH is a commodity. — Eleanor Terrett (@EleanorTerrett) June 27, 2022
At the time of writing, Bitcoin (BTC) trades at $20,900 with a 2% loss in the last 24 hours.Source