SEC’s Gensler Claimed ‘Most Cryptos Are Not Securities’ in 2018

Paigambar Mohan Raj
Source: Bloomberg

An old video of SEC (Securities and Exchange Commission) Chair Gary Gensler has surfaced, where he claimed that most cryptos are not securities. The video is from 2018 when Gensler was a professor of the “Blockchain and Money” course at MIT. Gensler said that three-quarters of the market are non-securities. He further stated, “It is just a commodity, a cash crypto.”

Additionally, Gensler said that cryptos fall under non-securities in three jurisdictions that use the Howey test. The three regions are the US, Canada, and Taiwan. In the lecture, he claimed that for the majority of the market, the argument over whether initial coin offerings (ICOs) are securities “is not particularly relevant as a legal or regulatory matter.” The Twitter crypto community was left speechless upon the revelation of the video. Some have even said it was a “checkmate” for the SEC. Many are confused about what happened to Gensler’s views in the last five years.

What’s interesting is that also in 2018, former SEC Chair William Hinman also made similar comments about the second largest crypto project, Ethereum (ETH). Hinman said that ETH had turned from a security to a non-security. The speech was made at the Yahoo Market Summit and has become a central piece of evidence in the SEC vs. Ripple lawsuit. The SEC vs. Ripple lawsuit has been ongoing since December 2020. The agency has accused Ripple of selling unregistered securities. The verdict is expected to shed some light on how the U.S. plans to regulate the crypto space.

Will the SEC change its stance on crypto?

Under Gensler, the SEC has begun a crackdown on U.S. crypto firms. This is amid the lack of proper regulatory guidelines from the SEC. Many businesses have expressed their displeasure towards Gensler, and their desire to have him removed. Coinbase has also recently filed a lawsuit against the SEC for the lack of clear regulations. In fact, Coinbase CEO Brian Armstrong also re-tweeted Gensler’s lecture with the caption “Wow.”

Furthermore, veteran trader Peter Brandt has spoken out against Gensler, saying that the SEC chair does not care about individual investors.

As the then-Chairman of the Commodity Futures Trading Commission (CFTC), Gensler allegedly made mistakes that caused the organization to become the getaway vehicle for significant bankruptcies and frauds involving futures commission merchants (FCM). However, whether the SEC will change its outlook on crypto is yet to be seen.