Chairman of the U.S. Securities and Exchange Commission (SEC) Gary Gensler in the discussion on CNBC Monday did not give a direct answer to the question of whether Ethereum (ETH) falls under the definition of security.
“I’m the chair of a five-member Commission that’s also a civil law enforcement agency. So, we don’t get involved in these types of public forums, talking about any one project, one possible circumstance, and give legal advice over the airwaves that way,” Gensler said. At the same time, he noted that “if you collect money from citizens, and they expect profits,” this could potentially fall under the securities legislation.
The Chairman of the Commission pointed out the need to introduce basic regulation to protect investors from “scams and fraud”. In his opinion, if the public expects a profit from investments, it should receive all the proper legal information.
The second largest cryptocurrency by capitalization does not belong to securities
Back in 2018, Jay Clayton, who held the post of head of the SEC at that time, said that Bitcoin (BTC) is not a security. At the same time, William Hinman, former director of the Division of Corporate Finance, expressed a similar opinion about Ethereum.
In 2019, Clayton confirmed that the second-largest cryptocurrency by capitalization does not belong to securities. This position became an important argument for the defense in the SEC case against Ripple.
Later in August 2021, the fintech company managed to get Hinman to court to testify; despite the regulator’s attempts to reject this petition. According to the ex-official, he warned Ripple about the risk of recognizing XRP as a security.
Potential conflict of interest and biased assessment of cryptocurrencies
The human rights organization Empower Oversight, the head of the fintech company Brad Garlinghouse; and the FOX TV channel announced a potential conflict of interest and a biased assessment of cryptocurrencies at various times.
According to journalists, the SEC employees behind the filing of the lawsuit could be affiliated with Ethereum.
In December, Empower Oversight demanded that the Commission disclose documents relating to a potential conflict of interest in the actions of former high-ranking officials.