SEC Chairman Gary Gensler Remains Silent When Asked If Ethereum Is a Security

When asked whether Ethereum is a security, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler refused to answer the question, according to Twitter user @NeilJacobs.

“When asked to comment on whether Ethereum meets the criteria for a security, SEC Chairman Gary Gensler declined to answer.”

The question of Ethereum’s status has also come to the fore since U.S. securities regulators filed legal action against Ripple for selling unregistered securities.

In 2018, former SEC Director William Hinman stated that neither Bitcoin nor Ethereum are securities, essentially giving both companies a free pass to operate as far as securities compliance is concerned.

But in the ongoing SEC v. Ripple case, the SEC’s arguments are being unravelled, and Hinman’s previous “characterisation” of Ethereum is one of them.

Gensler declined to answer questions raised whether that represented a red flag.

In the SEC v. Ripple case, the defense team pointed out that Ripple believes that XRP, Bitcoin, and Ethereum are not securities. The SEC failed to provide fair arguments to support this view.

The dispute stems from Hinman’s previous opinion that Bitcoin and Ethereum are “green” currencies, based on which Ripple believes XRP is not a security either.

As the case progressed, Ripple’s legal team provided the SEC with requested documents in an attempt to establish Crypto’s equal status, but so far has been unable to reach a conclusion.

But in a further twist, last month Judge Netburn granted Hinman a affidavit, meaning he must testify in court about the incident.

In response, Hinman filed an affidavit arguing that his 2018 comments were not the SEC’s position but rather an expression of his personal opinion. In practice, this means that Ethereum and Bitcoin are not necessarily securities.

Ripple CEO Brad Garlinghouse commented on the ridiculous turn of events by the U.S. Securities and Exchange Commission (SEC), saying that the SEC's avoidance of important issues will only confuse regulatory transparency.

“In 2018, Bill Hinman said Ethereum was not a security, and Jay Clayton agreed, but just a few weeks ago, Hinman filed an affidavit in court saying that the SEC still has not taken any position or expressed any opinion on Ethereum’s status… So, how is the market supposed to maintain clarity?”

This week Gensler spoke at the Aspen Securities Forum in Colorado, during which he called for more power to protect investors from the “lawlessness” of crypto.

Gensler said the asset class is rife with “counterfeiting, fraud and abuse in certain applications,” adding that the industry has only grown in popularity to circumvent the law.

“There’s a lot of hype and agitation around how crypto assets work,” Gensler said. “In many cases, investors don’t have access to rigorous, peer-to-peer, and complete information… If we don’t address these issues, I’m concerned that a lot of people are going to get hurt.”

In the past, Gensler has sought to distance itself from the Ripple case, saying the ultimate outcome would be determined by the courts.