U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has still not clearly answered whether Ethereum (ETH) is legally a security.
In an interview with Bloomberg on Thursday, the chairman was asked to clear up regulatory fog surrounding the second-largest cryptocurrency as applications for an Ethereum spot ETF are piling up on the agency’s desk.
Why didn't Gensler respond?
Gensler's answer remained ambiguous, saying: "In any of these crypto tokens, the key is whether the investing public expects to profit based on the efforts of others."
He quipped: “For any crypto token, the key is whether the investing public believes it has achieved profit expectations based on the efforts of others.”
"We do have filings before us at the moment, but I won't comment on that," he added.
Gensler’s reluctance to answer has added to the chaos in the crypto market since former SEC Director William Hinman gave a speech in 2018, in which Hinman expressed his personal view that Ethereum is a commodity rather than a security.
Gensler and the agency have since denied making any official statements or announcements on ETH, dodging the question multiple times when asked.
They also claim that dozens of popular cryptocurrencies, including Solana (SOL) and Cardano (ADA), are securities and have made this argument in lawsuits against major crypto trading platforms including Coinbase and Binance.
However, there are reasons to believe that the agency has a different view on ETH. Similar to Bitcoin, the SEC has approved the exchange’s CME Ethereum futures. According to Bloomberg ETF analyst James Seyffart, this means the asset has been treated as a commodity.
Additionally, Commodity Futures Trading Commission (CFTC) Chairman Rostin Benham has explicitly classified ETH as a commodity for years, and several pro-crypto members of Congress have backed his stance.
Testifying before a House committee on Wednesday, the chairman said that if the SEC allows Prometheum, an SEC-approved crypto broker, to classify ETH as a security on its platform, it could lead to more regulatory uncertainty. He is working closely with Gensler on the matter.
Benham explained: “This would make our registrants (the exchanges on which we list ether as futures contracts) subject to SEC regulations rather than CFTC regulations.”
Cryptocurrency remains a speculative place
While avoiding answering the question directly, Gensler reiterated that crypto remains a "highly speculative asset class" and referenced Bitcoin's volatility over the past week. He said:
“You should know, as the investing public, these volatile assets are a bit of a roller coaster ride, so the question is, how do companies lay the groundwork?”
After approving a Bitcoin spot ETF for open market trading earlier this year, Gensler noted that the SEC’s approval “is not an endorsement of Bitcoin” and claimed that the asset is often used in financial crimes.
