SEC Chairman Reiterates Stance: All Cryptocurrencies Except Bitcoin Are Securities, Looks Forward to Collaboration with CFTC

The chairman of the U.S. Securities and Exchange Commission, Gary Gensler, reiterated the SEC's position that Bitcoin is considered a commodity, while other cryptocurrencies are deemed securities due to the expectation of profits from the efforts of others. Consistent with previous statements, he declined to provide further comments on Ether and other tokens.

Bitcoin

In an interview with CNBC, facing questions from Wall Street's Jim Cramer, SEC Chair Gary Gensler stated:

Most tokens offer the public an expectation of additional returns, similar to investing in a financial product, which we refer to as securities. These tokens possess similar key attributes and should fall under SEC regulation, while Bitcoin is the only cryptocurrency that qualifies as a commodity.

He emphasized that he would not publicly comment on other tokens, and praised the Commodity Futures Trading Commission (CFTC), believing that the SEC working in conjunction with them would be the best two regulatory bodies in the U.S. For cryptocurrency regulation, cooperation with banking-related regulators is essential, especially in the stablecoin sector.

What about Ethereum?

Gensler did not give a definitive answer on whether Ethereum is a security, but in an interview with CNBC earlier this year, he pointed out:

If someone or something is raising money from the public, and the actions of the promoters, sponsors, or key actors lead the public to expect a return, then it must fall within the securities laws.

A similar viewpoint was reiterated by Gensler in the 6/27 interview.

"Crypto tokens–are raising money from the public, and are they sharing with the public the same sets of disclosures that helps the public decide and are they complying with our true in advertising?" says @GaryGensler. "It's about bringing them into the securities laws." pic.twitter.com/8mvFimxzXV

— Squawk Box (@SquawkCNBC) January 10, 2022

Statements from Former and Current SEC Chairs

Although Gensler's stance on other cryptocurrencies remains ambiguous, he previously stated regarding Bitcoin:

Bitcoin is a digital, scarce store of value, but a highly volatile asset. Investors may seek to profit from its high volatility or benefit from its low correlation to other markets. The SEC must remain neutral towards innovation, and Bitcoin could go to zero or skyrocket, that's its nature, hence the need for investor protection measures.

Former SEC Chair Jay Clayton, on the other hand, stated before stepping down in 2020:

We have not regulated Bitcoin as a security and have determined that it should not be classified as such. It leans more towards a payment mechanism and a store of value tool. Of course, the government should regulate payment systems, and we will see more related regulations in the payment sector in the future.

He believed that the inefficiency of payment mechanisms was one of the reasons for the rise of Bitcoin.