SEC Chair’s 2018 Video on Crypto and Cash Resurfaces, Sparks Debate on Twitter

In the Brief:

  • Gary Gensler's 2018 video resurfaces
  • He stated that cryptocurrencies are not securities, but commodities and cash
  • Crypto community reacts with surprise and some call for explanation
  • Others defend Gensler's remarks as being made in a different capacity as a professor

3 - 5 minute read

The crypto community is in an uproar over the hypocrisy of Gary Gensler, the current head of the United States Securities and Exchange Commission (SEC). A 2018 video recently surfaced of Gensler, who was then a professor at the Massachusetts Institute of Technology (MIT), stating that cryptocurrencies are not securities but rather on par with commodities or cash. The video came from a “Blockchain and Money” class in the fall semester of 2018, where Gensler discussed initial coin offerings (ICOs) and stated that “three-quarters of the market are not ICOs or not what would be called securities.”

Gensler also named the U.S., Canadian, and Taiwanese markets as the “three jurisdictions that follow something similar to the Howey Test,” but he concluded that “three-quarters of the market is not particularly relevant as a legal matter.”

These statements have left many in the crypto community shocked and feeling as though Gensler has gone back on his word. Coinbase CEO Brian Armstrong responded to a Twitter post about the video with a simple “Wow,” while Erik Voorhees, the founder of crypto trading platform ShapeShift, questioned when someone would be arrested for fraud.

However, not everyone in the crypto community is convinced that Gensler should be held to the same views he had as a professor, with U.S. lawyer Preston Byrne stating that professors and law enforcers work in “different capacities.” Byrne also noted that Gensler’s interpretation of the Howey Test may have changed by virtue of his current position as SEC Chair.

The Bottom Line

Gensler’s previous statements regarding cryptocurrencies have resurfaced, causing controversy within the crypto community. Traders should stay vigilant for any potential regulatory changes that may result from this situation.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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