Gensler dodges question on Ethereum’s status

SEC Chair Gary Gensler of the U.S. Securities and Exchange Commission (SEC), appearing on CNBC, did not give a direct answer to the question of whether Ethereum falls under the definition of a security.

“We do not participate in such public forums to discuss any one project or potential circumstance, nor do we provide legal advice on air,” Gensler noted.

At the same time, he said that “if you raise money from the public and they expect profits,” this could potentially fall under securities laws.

The chair pointed to the need for baseline regulation to protect investors from ‘lies and fraud’. In his view, if the public expects profits from investments, it should receive all the necessary legal information.

In 2018, then-SEC Chairman Jay Clayton stated that Bitcoin is not a security. At around the same time, a similar view regarding Ethereum said by the agency’s William Hinman, director of the Division of Corporate Finance.

In 2019, Clayton confirmed that the second-largest cryptocurrency does not constitute a security.

This position became an important argument for the defense in the SEC v. Ripple case. In August 2021, the fintech company managed to secure Hinman’s appearance in court to testify, despite attempts by the regulator to dismiss the motion. According to the former official, he warned Ripple about the risk of XRP being deemed a security.

At various times, concerns about conflicts of interest and biased assessment of cryptocurrencies were raised by Empower Oversight, the head of fintech company Brad Garlinghouse and FOX Channel. According to journalists, the SEC staff behind filing the suit could have been affiliated with Ethereum.

In December Empower Oversight called on the Commission to disclose documents relating to potential conflicts of interest in the actions of former senior officials.

Back in late 2021, the Deaton Law Firm’s team concluded that the regulator showed greater loyalty to Ethereum than to XRP.

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