Gary Gensler insists that Bitcoin is not a security; declines comments on other cryptocurrencies

• SEC Chair claims that most crypto assets have the characteristics of a security.
• Gensler said that the combined efforts of the SEC, CFTC, and bank regulators would help regulate digital assets in the US.

Recently, CNBC interviewed Security and Exchange Commission (SEC) Chairman, Gary Gensler. During the interview, Gensler insisted that Bitcoin is a commodity, not a security. However, he said he wouldn’t tag other cryptos as commodities.

Gensler also said Bitcoin is the only crypto asset that the commodity futures trading commission (CFTC) can regulate. Then, he added that he wouldn’t comment on other coins or tokens.

Gensler explains his position on crypto’s classification

Gensler said, “my predecessors and others say these other tokens are a commodity. So, I won’t talk about any of them.” The SEC Chair claimed that most other digital assets have significant characteristics, making them securities.

He explained that the two are similar in that the “investor in any of them is hoping for a return.” The main issue with the regulation of cryptos has been their classification. Some claim that they operate like stocks. Hence, they should be classified as securities.

However, others claim that they function as gold. Thus, they should be classified as commodities. Gensler’s predecessor classified Bitcoin and Ethereum as commodities. However, Gensler only classified Bitcoin as a commodity in his latest comments.

Previously, he always declined to comment on whether Ethereum is a commodity or a security. Before Gensler took over as SEC Chair, the commission’s previous executives had publicly stated that Bitcoin and Ethereum are commodities.

However, many argue that Ethereum cannot be labeled as a commodity, given that it was launched through an ICO in 2014. By today’s definition, an ICO would mean an illegal securities offering.

Four years ago, SEC’s head of corporate finance, William Hinman, said he would classify Bitcoin and Ethereum as commodities. His reasons were that Bitcoin and Ethereum are sufficiently decentralized (they don’t have a central authority). Nonetheless, the classification of Ethereum as a commodity has been the prominent bone of contention every time.

It is also one of the main reasons the SEC-ripple court case has dragged on for so long. The SEC is claiming Ripple sold its XRP tokens as unregistered securities. However, Ripple denies that their action wasn’t illegal since Ethereum was also launched as an unregistered security. That might be why Gensler continues declining comments on all other cryptos, especially Ethereum.

Related: Is that Bill Hinman clearing ETH as a security? SEC refuses to confirm or deny identity in 2018 speech video

Crypto regulation in the US

During the interview, Gensler also spoke about regulating virtual currencies in the US. Gensler said regulating digital assets should be a combined effort of the SEC and CFTC. Then, he added that the banking regulators would also need to step in since they regulate stablecoins.

The SEC Chair further said many tokens were “non-compliant.” Hence, regulators must put in a lot of effort to protect investors.