The Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, has stated that all digital assets, apart from Bitcoin, are securities according to US law.
Mr Gensler shared his insights into the classification of digital assets in an interview with the New York Magazine. They discussed his March 2022 meeting with FTX‘s Sam Bankman-Fried, the implosion of the exchange, crypto regulation and which digital assets classify as securities.
Tokens are Securities Whether Launched Outside the United States
Concerning which digital assets classify as securities, Chairman Gensler reiterated that it did not matter whether crypto projects registered and launched their tokens outside the USA. They still were securities even if introduced to the US much later since the public and retail investors anticipated profits.
He said:
Everything other than bitcoin.
You can find a website, you can find a group of entrepreneurs, they might set up their legal entities in a tax haven offshore, they might have a foundation, they might lawyer it up to try to arbitrage and make it hard jurisdictionally or so forth.
They might drop their tokens overseas at first and contend or pretend that it’s going to take six months before they come back to the U.S. But at the core, these tokens are securities because there’s a group in the middle and the public is anticipating profits based on that group.
Ethereum Could be Targetted Next by the SEC
Chairman Gensler’s comments have sturred murmurs in the crypto community. Many now believe Ethereum will most likely be declared a security by the agency. They have pointed to the recent $30 million settlement with Kraken that involved the exchange ending crypto and Ethereum staking services to its US clients as an example of the path the SEC has decided to take moving forward.
The notion that Ethereum is a security has been debated since its token sale in 2014. It has since gathered momentum after transitioning into a proof-of-stake network with the Merge in September 2022.
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