The chair of the House Financial Services Committee, Maxine Waters, blasted Securities and Exchange Commission (SEC) Chairman Gary Gensler for his comments on the regulatory classification of Ether during a hearing on Tuesday. The hearing, titled “Oversight of the Securities and Exchange Commission,” saw Gensler questioned by members of the committee on a range of topics, including cryptocurrency regulation, where Gensler fails to answer if Ether is a security.
Maxine Waters challenges Gensler on Ether’s regulatory classification
During the hearing, Waters asked Gensler to clarify whether he considered Ether, the second-largest cryptocurrency by market cap, to be a security under the purview of the SEC. Gensler responded by saying that he viewed Ether as a commodity, similar to Bitcoin. However, Waters appeared unsatisfied with Gensler’s answer and criticized him for not being more specific in his definition of Ether’s regulatory status since Gensler fails to answer if Ether is a security.
“You won’t answer my question, and you’re the head of that agency,” Waters said. “I’m asking you to give me a better definition.” Gensler responded by saying that the SEC had already issued guidance on the regulatory status of cryptocurrencies and that he was committed to working with Congress to provide more clarity. “I’m trying to be very specific in my words,” Gensler said. “I believe that cryptocurrencies, broadly, are commodities… and we’ll work with you to provide more clarity.”
Gensler views Ether as a commodity
Waters continued to press Gensler on the issue, asking him whether he believed that Ether had been sold as a security in its initial coin offering (ICO) in 2014. Gensler acknowledged that there were some aspects of the Ethereum ICO that might have been considered securities offerings but that the SEC had not made a definitive ruling on the matter.
“I think there are some aspects of the original sale of Ether that probably did constitute securities offerings,” Gensler said. “But I think we’re past that point now, and the network has matured and decentralization has taken place.” Waters expressed concern that Gensler’s comments could lead to confusion over the regulatory status of cryptocurrencies, particularly as the SEC continues to grapple with how to regulate the emerging asset class.
Lack of clarity on regulatory status causes concern
“I think you need to be more specific,” Waters said. “You’re the head of that agency, and you have a lot of power.” The hearing also touched on other issues related to cryptocurrency regulation, including the SEC’s ongoing lawsuit against Ripple Labs and the agency’s efforts to crack down on fraudulent initial coin offerings.
Gensler reiterated his commitment to protecting investors in the cryptocurrency market, saying that the SEC was focused on ensuring that market participants followed the rules and regulations in place.
SEC’s focus on protecting investors in the cryptocurrency market
“We want to make sure that investors are protected, that they have the full and accurate information they need to make informed decisions,” Gensler said. “We’re working to ensure that the market operates in a fair and transparent manner.” Despite Waters’ criticisms as Gensler fails to answer if Ether is security, he comments on Ether were largely in line with previous statements from the SEC.
However, the issue of how to classify cryptocurrencies remains a contentious one, with many experts calling for clearer guidance from regulators. As the cryptocurrency market continues to grow and evolve, it’s likely that regulators like the SEC will face increasing pressure to provide more clarity on how these assets should be regulated. Whether Gensler and his colleagues at the SEC will be able to provide that clarity remains to be seen.