Securities and Exchange Commission (SEC) Chairman Gary Gensler recently confirmed that he believes Bitcoin is best classified as a commodity, rather than a security. However, he refused to comment on the classification of any other cryptos, leaving the status of altcoins like Ethereum still unclear.
Bitcoin VS The Rest
In an interview with CNBC on Monday, Jim Cramer asked the chairman about his collaboration with the Commodities and Futures Trading Commission (CFTC) in regulating digital assets. Gensler responded with his oft-repeated view that most of the crypto market – which is a highly speculative asset class – is comprised of securities.
“The investing public is hoping for a return, just like when they invest in other financial assets we call securities,” he said.
However, Gensler granted that some assets – namely Bitcoin – can be labeled as commodities, noting that his predecessors have been willing to classify them as such. “That’s the only one I’m going to say because I’m not going to talk about any one of these tokens,” he added.
During his tenure, former SEC chairman Jay Clayton also maintained that Ether – the second-largest cryptocurrency – was a commodity. However, when asked by CNBC what he thought of the asset’s legal status in January, Gensler avoided giving a direct answer.
In fact, when teaching a blockchain-focused course at MIT in 2018, the chairman argued that Ether’s ICO resembled that of a securities offering. He specifically claimed that it passed the “Howey Test” – a simple litmus test used for classifying securities since the 1930s.
The only solace that Gensler has offered to Ethereans came from an indirect source. US Senator Kirsten Gillibrand stated earlier this month that both Gensler and CFTC Chairman Rostin Benham were in agreement that Ether is a commodity. While Benham has backed this claim directly, Gensler remains tight-lipped on the issue.
Commodities, Securities, or Neither?
The crypto industry is internally torn on how digital assets should be classified. Some devout Bitcoiners like Max Keiser maintain that only Bitcoin is a commodity, while all other cryptocurrencies are unregistered securities.
“The overwhelming evidence shows that ETH, Vitalik [Buterin], [Joseph] Lubin, the entire ETH team, and those trading it… openly discussed ETH as designed to be, with the intention to be, a security,” he told CryptoPotato in mid-June.
Meanwhile, some industry leaders think that crypto assets are unsuited for such a binary classification at all. For example, Cardano founder Charles Hoskinson testified on Thursday that “category-based regulation” would be antithetical to crypto, as it would depend on “centralized actors” for reporting and disclosure.