During an interview with New York Magazine, the chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, stated that all cryptocurrencies are securities and fall under the jurisdiction of his commission. The exception is bitcoin.
But what did Gensler really say? And what does it mean for the market?
The debate is about an interview that the SEC boss gave to the New Yorker. In it, Gensler gives insights into how he thinks about the crypto market and financial regulation itself. For example, he does not see what the point of crypto is and finds releasing tokenization dangerous:
“We live in a world where Amazon stock and U.S. treasuries are already digital,” Gensler explained. “So many of the bills, literally, you could take the $24 trillion treasury market, put it on a blockchain ledger, and take it outside of the current regime” of federal regulation. “
One’s ideal, the other’s nightmare. Gensler’s role is that of trying to force the genie back into the bottle from which it escaped long ago. Who tries to put out all the campfires after Prometheus gave the fire to the humans.
The SEC boss believes that no new laws are needed for this. The existing ones already give him the mandate to crack down on the crypto market. He is convinced, writes the “New Yorker”, that “more or less every type of crypto transaction already falls under the jurisdiction of the SEC”. The only exceptions are spot trading with Bitcoin and the purchase or sale of goods with cryptocurrencies.
Then Gensler delivers the quote that delights some Bitcoin maximalists: “Everything but Bitcoin”. For anything but bitcoin, “you find a website, a group of intermediaries who may have set up a legal entity in a tax haven; they may have a foundation, and so on.” The issuers of the tokens take many detours and invent many stories. “But at their core, these tokens are securities because there is a group in the middle and the public expects profits based on that group.”
Bitcoin alone is fundamentally different because of its unique history.
Does this mean that everything but Bitcoin will be banned in the US? That the SEC will go after all other cryptocurrencies and tokens? Will regulators sue any exchange that offers more than bitcoin? Will every foundation and ecosystem have to register their tokens with the SEC? Will a gigantic wave of lawsuits roll over the crypto market in the US?
Anyway, the head of the SEC himself had doubts for several years. In 2021, Gensler was asked several times whether ETH is a security. He did not want to clearly answer this question. What may be surprising in this context, however, is that stablecoins are also securities in his eyes.
Is the SEC looking to show overzealousness?
SEC attacks on the cryptocurrency market intensified shortly after the collapse of the FTX exchange . The case even took on a political character, as many politicians accused Gensler of puzzling tardiness regarding this platform . Now the authority seems to want to show overzealousness.
The effect of the actions of officials may also be an attack on the cryptocurrency market and an attempt to marginalize them. This may be a more cunning policy than China, which introduced a total ban on digital assets, but rather doomed to failure (which is also shown by the case of the Middle Kingdom, which is slowly withdrawing from its ban.