SEC’s Gensler: Bitcoin not a security

Gary Gensler, chair of the SEC, reiterated the agency’s stance that Bitcoin is not a security during a recent CNBC interview, emphasizing the regulatory classification of Bitcoin as a commodity. This aligns with previous SEC filings that have recognized Bitcoin in this way. Gensler pointed to the SEC’s approval of several spot Bitcoin exchange-traded funds as evidence of the agency’s acceptance of Bitcoin within the financial system.

However, the SEC’s treatment of Ethereum has been markedly different. While Ethereum ETFs have also been approved, the SEC has opened investigations into various Ethereum service providers and has refrained from clearly categorizing Ethereum as either a security or a non-security. This ambiguity has led to criticism from U.S. policymakers, who accuse Gensler of creating confusion in the crypto industry and using terms like “crypto asset security” without clarity.

During a recent Congressional hearing, Gensler faced backlash for allegedly stifling blockchain innovation and fostering uncertainty in the crypto market. He reiterated that existing regulations apply to the crypto space and expressed frustration that many industry participants have not complied with these rules, suggesting that they seek special treatment instead.

This ongoing tension between the SEC and the crypto industry underscores the challenges of navigating regulatory frameworks in a rapidly evolving market, where clarity and consistency are still being sought.

Gensler’s recent statements on Bitcoin and the regulatory landscape for cryptocurrencies have drawn criticism, particularly in light of contrasting remarks from Robinhood Markets’ lead attorney, Dan Gallagher. During a separate hearing, Gallagher, a former SEC official, claimed that the SEC has been largely unresponsive to Robinhood’s registration attempts, citing instances of delayed feedback or complete lack of response from agency staff.

Commissioner Hester Peirce echoed Gallagher’s concerns, suggesting that such inaction contributes to a significant policy gap that Congress needs to address. Both Gallagher and Peirce’s comments highlight frustrations within the industry regarding the SEC’s regulatory approach, which they argue has created uncertainty and hindered innovation. This discord between Gensler’s assertions and the experiences of industry players underscores the ongoing challenges in the relationship between regulators and the crypto sector.