Ethereum
SEC Chairman Gary Gensler Avoids Direct Classification of Ethereum
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Securities and Exchange Commission (SEC) Chairman Gary Gensler did not directly address whether Ethereum is a commodity or a security in an interview with CNBC on Tuesday. Instead, it shifted its focus to broader regulatory concerns, particularly the protection of U.S. investors and the conduct of intermediaries in the crypto market.
“All I would say is that, to me, the fundamental question is: How can we ensure that the American investor is protected? And right now, they are not getting the required or necessary information,” Gensler replied to an investigation regarding the classification of Ethereum by Andrew Ross Sorkin on CNBC’s “Squawk Box.”
“And the intermediaries at the center of this rather centralized market are generally conflicted and doing things that we would never allow the New York Stock Exchange to do. The New York Stock Exchange is not authorized to trade against investors,” Gensler said.
The legal status of Ethereum is among the main areas of discussion, as how Ether is classified could indicate how it could be regulated and whether it could be included in traded funds like ETFs. Unfortunately, Gensler did not provide a definitive answer.
In his brief comment on the potential for Ethereum exchange-traded funds (ETFs), the SEC chairman said the filings are currently under review. He shifted the conversation from specific findings regarding the Ethereum ETF to the SEC’s broader goals.
Although the SEC’s position on Ether has not been disclosed, the agency’s alleged actions speak louder than words.
A number of reports show the agency is attempting to classify Ether as a security. THE investigation into the Ethereum Foundation would be part of it.
Recent court filings have also highlighted that the SEC Deems Ethereum Security Unregistered for at least a year. Numerous subpoenas and document requests have been sent to entities associated with Ethereum.
Focus on crypto is driven by media
According to Gensler, crypto represents a small part of the financial market. However, it attracts widespread journalistic attention because it attracts a disproportionate share of scams, fraud and regulatory problems.
When asked why the SEC has spent so much time on crypto despite its modest $110 market cap, Gensler said the focus on crypto is driven more by media and public interest than by the SEC schedule.
“I’ve been on your show, what, a dozen times? And on every show, you ask questions about cryptography. And I guess this will be a majority interview about cryptocurrencies. While the capital markets are worth $110 trillion. So it’s also about what the financial media is focusing on,” Gensler said.
Gensler added that many tokens do not comply with the necessary protections required by these laws. This non-compliance results in a lack of appropriate disclosures and protections for investors.
The SEC chief also avoided discussing oversight of various market participants, including Robinhood, which recently received a Wells Notice from the SEC. He just said that investors need protection and that the SEC’s general role as a regulator is to ensure compliance with the law in securities trading.
The SEC faced backlash members of the crypto community and lawmakers after threatening to sue Robinhood’s crypto arm. Crypto critics argue that the SEC should protect investors rather than stifle crypto innovation and that it has paid excessive attention to the industry.
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