ETH Security Or Commodity? No Clarity From SEC Chairman

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The SEC, under Chair Gary Gensler, remains ambiguous on whether Ethereum should be classified as a security or commodity amid increasing attention on Ethereum ETFs.

SEC Chair Gary Gensler's Ambiguity

The chair of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, declined to offer a clear stance on whether Ethereum (ETH) should be classified as a security. When pressed on the matter during an interview, Gensler reiterated the SEC's approach, stating, 

"On any one of these crypto tokens, it's about the facts and circumstances as to whether the investing public is anticipating a profit based on the efforts of others. We do have filings in front of us. I'm not going to comment." 

He emphasized that the determination regarding Ethereum's classification depends on the specific facts and circumstances surrounding each cryptocurrency token.

Genslar’s Views On Crypto

However, as his nature warrants, Genslar did not miss the opportunity to comment on the speculative nature of cryptocurrencies and call them volatile. Despite refusing to shed any light on the SEC’s stance on Ether, Gensler drew similarities between all cryptocurrencies and roller coaster rides.

The SEC's stance on Ethereum has attracted increased attention amid the consideration of multiple applications for U.S. spot Ethereum ETFs. Notably, the regulator recently deferred a decision on the iShares Ethereum Trust from investment giant BlackRock, as well as applications from Fidelity, Invesco, and Galaxy Digital.

Arguments for Ethereum as a Commodity

Many within the cryptocurrency sector advocate for Ether to be classified as a commodity rather than a security. Global regulators like the U.S. Commodity Futures Trading Commission (CFTC) and the UK Financial Conduct Authority (FCA) already regard Ether as a commodity. The approval of Ethereum Futures ETFs further supports this classification.

Bloomberg’s ETF analyst James Seyffart argued that the SEC "implicitly" accepted Ether as a commodity when approving the futures ETFs. He pointed out that the SEC didn’t object to ETH being categorized as a commodity when registered with the CFTC. The first ETH futures ETF was listed for trading on October 2.

Contrast with Previous Statements

Gensler's reluctance to affirm the SEC's position on Ethereum's classification stands in contrast to his previous statements. In 2018, while still a lecturer at MIT, Gensler asserted that Ethereum is "not a security" in the eyes of the SEC. He referenced the SEC's view of Ethereum as "sufficiently decentralized," as expressed by the SEC's former Director of Corporate Finance, William Hinman, in a speech from June of that year.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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