SEC head shied away from defining Ethereum at a congressional hearing
SEC chief Gary Gensler refused to recognize Ethereum as security at a U.S. Congressional hearing
Congressman Patrick McGarry asked Gary Gensler five times how he would classify the second-most-capitalized crypto-asset but got no direct answer
The head of the U.S. Securities and Exchange Commission (SEC) Gary Gensler refused to recognize Ethereum as security at a hearing of the U.S. House Financial Services Committee. During the hearing, Committee Chairman Patrick McGarry was asked at least five times whether Gensler thought the leading altcoin was a commodity or a security, but never got a clear answer.
The congressman noted that CFTC Chairman Rostin Behnam called Ethereum a commodity and the New York State Attorney General called it a security. McGarry asked Gensler how he would classify Ethereum. Gensler responded by saying that current laws were perfectly adequate to answer that question, that the definition was consistent with "the facts and the law," and that there were a large number of digital asset-related projects that violated securities laws.
"You (SEC) have taken 50 enforcement actions. We're finding out as we go along, as you file lawsuits, as people get Wells notices about what security is, from your perspective and from your agency's perspective. I ask you a very simple question about the second-largest digital asset. What's your point of view?"
Without an answer, McGanry asked Gensler if such uncertainty and divergence of opinion between the CFTC and the SEC was hampering the market. To which the head of the SEC said that it was his agency that had been approved by Congress to be responsible for these issues, and the existing securities laws were quite clear in their regulation.
During the hearing, Gensler also criticized the SEC for not learning its lesson from the FTX debacle and not prioritizing investigations into offshore platforms like Binance and Tether, but instead pressuring US exchanges like Coinbase, Gemini, Kraken, and others to relocate to other jurisdictions like China.
This is not the first time the head of the SEC has argued that existing securities laws "cover much of the activity that occurs in the cryptocurrency markets." In late March, after appearing before the U.S. House Appropriations Committee, Gensler said there was no need for additional legislation for cryptocurrencies, and that new regulations proposed would "undermine the competence" of existing ones.
He also stated that Proof-of-Stake (PoS) cryptocurrencies, such as Ethereum, fall under the definition of securities.