Bitcoin Forum

Gary Gensler, the newly appointed chairman of the US Securities and Exchange Commission, told Squawk Box on Friday that "many" cryptocurrencies are originally securities:
"As long as an asset class is classified as a security, the Securities and Exchange Commission (SEC) has a lot of authority over it. "A lot of cryptocurrencies, which I don't think should be called that, are actually securities."
In 2018, Gansler stated that Ethereum and Ripple could fall within the scope of defining unregistered securities.
He went on to describe Bitcoin as the market's largest cryptocurrency, describing it as a source of storing digital value and, of course, "very unstable." He acknowledged that bitcoin is not in the category of securities.
In the interview, Gensler was also asked about the upcoming Saturday Night Live show hosted by Elon Musk. He replied that he had no advice for the people participating in the show.
Dogefather, who has previously had problems with the SEC, is expected to talk about Dogecoin on the show.


Source: https://u.today/sec-chair-says-a-lot-of-crypto-tokens-are-securities-calls-bitcoin-store-of-value

I would not be surprised if this is indeed happening, however, I see some problems:
1. Why all this has to be as declarations instead of clearly helping out the "culprits" into doing it right or fine them? Because in the current way it's just cheap talk against crypto scene.
2. Isn't it a bit late to notice and handle this? And I'm back to cheap talk at TV.
3. Are there any proper guidelines to allow a coin/whatever get properly categorized? (I clearly don't know, but I somehow doubt it).

So.. yeah... politics...


Edit: I've found out that SEC did actually act too, just I didn't know. See here: https://bitcointalk.org/index.php?topic=5336088.msg57155143#msg57155143

OK, that seems to be an ominous statement--what would the implications be if ETH, XRP, and other cryptocurrencies be if they were legally classified as "cryptosecurities"?  Would that mean their creators be legally liable for the consequences of distributing an unlicensed security?  I'm not sure where this guy is going with that.

One thing I do agree with is that crypto has turned out to be far closer to a security (though I'm not 100% sure what the true definition is of that word) than a currency.  Bitcoin as an example, has been used far more as an investment than as a form of money--though obviously it could function as either. 

These government functionaries drive me nuts with their regulation (or their talk of regulation as is the case here).  I'm afraid this crap is only going to get worse under the Biden administration, and it's too bad Trump was the republican party's choice for president.  If we'd had a much less volatile president in the Republican party, he might have gotten re-elected and we probably wouldn't have to worry about this stuff.

So far we have only seen elon's tweets about DogeCoin without any direct statements when on television shows or on several shows in which Elon is included. with the rare chance that Gary Gensler meets Elon Musk, then we will find out how beneficial the existence of Elon is to Crytocurrency, especially DogeCoin.

because, we only know that the SEC is an authority body that has the right to question any suspicions that contain elements of centralization in both the stock market and the crypto market. So the opportunity is during the event we have to know what the SEC is really looking for

The point of view is very clear from the director of the SEC, that any asset considered a security is managed by the SEC. We have seen the lawsuits and accusations from the SEC stand out as their lawsuit against XRP and in the past, securities charges against KIN and ETH.
The effects of the SEC on cryptocurrencies are often negative. ETH, XRP and KIN all dropped in price while the SEC made its statement. If they come here to announce their views, a wave of price decline may occur with cryptocurrencies.

"
Look! Up in the sky! It's a bird!
It's a plane!
It's Superman!"

Is it securities? Is it toilet paper? Is it legal tender? No! Its cryptocurrency. Its new invention with its own name. When people invented cars in XIX century they called it "car" and prepared the laws. They did not try to call it "chaise" to use old laws, to force car owners to feed and water their car as they were obligated to do with their horses.

We don't need SEC here. They should focus on Wall street abusers. On banks manipulations:

"JPMorgan fined $1.26 billion for manipulating precious metals" - https://www.straitstimes.com/business/banking/jpmorgan-fined-126-billion-for-manipulating-precious-metals-treasury-market

"JPMorgan slammed with $920m penalty" - https://www.aljazeera.com/economy/2020/9/29/bbjpmorgan-admits-spoofing-by-15-traders-2-desks-in-record-deal

"EU Fines Banks For Manipulating Currency Prices" - https://www.pymnts.com/news/regulation/2019/european-union-bank-fines-currency-manipulation/

"Deutsche Bank to Pay Over $130 Million to Settle Charges" - https://news.bloomberglaw.com/white-collar-and-criminal-law/deutsche-bank-reaches-100-million-deal-to-settle-u-s-charges

"Deutsche Bank Fine for Silver Market Manipulation" - https://www.swissbullion.eu/en/posts/deutsche-bank-fined-for-market-manipulation

Each time same story. Bank is paying fines and continue to manipulate because they earn 10 times more from manipulatin.

Why SEC is interested in crypt and why now? Simple. Short XRP, announce investigation. Short BNB, announce investigation. Short XXX, announce investigation. They are owners of the biggest pool of insider knowledge now. Why they are interested now? "2. Isn't it a bit late to notice and handle this?" Because now its worth to do this. They don't care about investors. They would do that 5-10 years ago. They care to grab as much profit on their pool of insider knowledge.

He is 100% correct. Look at ETH and how vitalik controls it, look at BNB and how CZ controls it, look at XRP and how Ripple company controls it. At the end of the day they are really securities because of that and that is what I believe he is talking about. Don't get him wrong, this dude is a big crypto fan and he has always been in favor of making good regulations for crypto so that it could be go up super high and become better.

At the end of the day there is really nothing he would say just to hurt crypto, he is just saying what he thinks and that is the thing about this as well, he is saying the truth because most of them ARE controlled by people at the top and that makes it a securities very easily. I believe if this could be handled, we could either have a lot more registered crypto in USA or we would have really true decentralized ones.

It is necessary that the SEC does not establish the belonging of the cryptocurrency to a certain class of financial assets, but a full-fledged law was adopted that would unbiasedly solve all the current problems with the cryptocurrency. Of great importance in this matter will be the result of the consideration by the court of the SEC's claim against Ripple Labs and its two executives regarding ripple's ownership of securities. If the legislators are still silent, it is possible that at least the courts will be able to make a fair decision on this issue and reduce the enthusiasm of the SEC employees.

As long as he was saying about security, I was fine but when he decided that the SEC commission have a lot of authority over it. WoW, JUST WOW!
• cryptos are literally trying to differentiate themselves from the Centralized bodies, the term decentralization only came to be known after Bitcoins and other cryptocurrencies. If the government did not support it in any way then how can they expect to profit from this ?
• The government is already talking super duper unfair taxes! Now what do they want to do by making such statements? Own them ? What about their real owners? Even if the owners chooses to hide their identities, they are still owners.
• Makes me wonder if this is a democracy or dictatorship?
- They literally need to earn such statements first. Try and Integrate cryptocurrencies with the economy and start supporting them for real , instead of making banks pause all the transactions.
-They need to provide services and security because they are already earning taxes from there! Without going so much into it and pushing it a step towards Centralization.

It can be argued that if it was not for Trump the Republicans would had no chance to win that election as Hillary was by far the favorite to come up on top, and it was a great upset that Trump won that election so it is not as if you had too much of a choice.

Now I agree that the SEC and their regulations are a complete pain but I will agree with them on this, most of the coins being released are not actual coins but securities which means they have jurisdiction over most altcoins, something which should be worrying as I have no doubt they may try to kill as many altcoins as they can in order to show their ability to control this market.

How can ETH or XRP be securities, if they don't grant any sort of ownership over anything, like shares do, and don't represent any debt? Is the argument that they are securities based on the fact that they were used to gather capital by centralized entities? If so, then every single ICO is a security, but we've seen from the past that SEC only went after a small number of ICOs and not all of them.

Then let them walk the talk and duly file a case against Ethereum and the thousands and thousands of other cryptocurrency companies for issuing unregistered securities. Let the plaintiff argue its case and the defendant defend its actions.

If only all these legal processes would be truly objective, this is going to be a win-win situation for all of us. We all know that cryptocurrency is still largely an alien thing to the government. They have yet to thoroughly understand it. As a matter of fact, regulations came first before knowing and understanding. Unfortunately, there is already politics involved and that the government's position is not neutral right from the start but highly antagonistic.

Have to agree with you on ETH, BNB and XRP. There is very little decentralization with these coins. Personally I don't really care what future steps will be taken by the SEC. They have explicitly stated that Bitcoin doesn't come under the scope. That's all I care about. The altcoins are like a hyper-inflated bubble now and they can burst at any point of time. The only question now is what will be the trigger for such an event, and when is it likely to happen.

Considering the crypt as money is at least not logical yet. But she still must have some status. And probably the option with shares is the most suitable at the moment. On the one hand, the crypt has value. On the other hand, it can be exchanged for another crypto, or sold / bought for fiat money. But in mass consumption, nowhere are there price tags in the crypt, and in fact there is no means for the normal acceptance of payments in the crypt. Everything is exactly like with shares - in general, you can pay it off, but first you sell it at an auction / exchange, and for the money you will buy something in a store.

Am I misinformed here? Didn't the last SEC chairman publicly announce that ETH once fell into the category of securities but that is not the case anymore? What kind of dick move would it be to revoke such a categorization just because the chairman changes?


You could argue that that is the same for currency traders who trade foreign currencies solely for the purpose of using them as an investment vehicle with the prospects for a future profit. I do agree with you and relatively early came myself to the conclusion that most of cryptocurrencies could be labeled securities. But with all due respect for the existing law, if the world of finance changes so drastically it is more than obvious that the law has to also change such that it does at least in part sufficiently accommodate this digital, financial and above all social revolution.


May have been the case, but Trump also was against Bitcoin. He was talking about money laundering as well while evading taxes all over the world. We can only hope that a younger generation of presidents with younger kids growing up with this stuff get elected in as many countries as possible all over the world. It's mostly stone age presidents trying to avoid the emergence of a level playing field where the less wealthy or even the poor now also have a chance to participate and, not that I advocate that, even hide and store money in places the corrupt politicians have no access to.

Yep, anyone can basically run a howey test (https://www.investopedia.com/terms/h/howey-test.asp) and for most tokens the result will be at minimum, quite close to a yes. If you promise any right or have any contract attached to the sale of tokens or coins, the chairman is right.

It is a fact that most crypto project have been in denial of this rule, since it makes much more expensive to launch a token or a coin and requires a level of regulation that would not be achievable for may of the smaller initiatives that are relatively poorly funded.

https://miro.medium.com/max/2400/0*NTfs_SzMxhssiakf.jpeg

Sure but denying a rule doesn't make that rule not apply to you. ;) It's a fact that most projects operate their coin or token as a security. The Howey test is one thing, but the way we see the world of finance and want it to be in the future is very different. It should be possible to launch a business ultra quickly and the same counts for raising money. Maybe the better approach is to force everyone through a standardized educational course (just two hours) where you provide examples of typical scam projects and what to watch for. Name clear indicators of a scam. That way you make sure everybody has the chance to participate in the market within a shortest amount of time. Right now it s just not equal if you look at their requirements in order to qualify as a legit participant for an ICO or crypto trading.

That is pretty much their argument and to me that is more than enough, bitcoin is not a security because satoshi never asked for a monetary compensation for bitcoin, people on their own decided to begin to trade this new coin out of their own volition.

ETH, XRP and almost any coin in existence did not followed this model and instead sold their coins, this makes it a security and while the SEC has not taken action against all icos they do not have to, they are not going to waste their time with coins that are so small, they will go against the big coins and since many of those coins are centralized then they can easily destroy them if they want.

If all ICOs are securities by definition, SEC should have just banned ICO. Tell all exchanges that operate in the US to delist ICO tokens, prohibit running ICOs in the US, etc. You can't run a small unregistered IPO and not face the consequences, doesn't matter if you raise $1,000 or $1,000,000 - a scam is a scam. So why should ICO get a free pass? The law should be consistent and clear.

Sure, a lot of cryptotokens are indeed securities now - but bitcoin is definitely not one of them.

Also you have to take into consideration that even though crypto tokens may be securities (based on the way the token is structured), they are generally decentralised in its distribution and its ledger is hosted on an immutable blockchain.

How in the world does the SEC plan on exerting their influence over this? They could regulate these tokens, but the unregulated ones will simply roam wild and there will be no enforceability for their rulings.

They will attack those guys who are responsible for the ICOs for example. In the case of Ethereum it would be pretty easy to nail down who is responsible. The whole team around Vitalik and whoever was actively involved in the token sale. And yes you are right, double standards are inevitable. Crack down on those who are known and when there is nobody known to be responsible, just leave it as it is. Sounds fair, doesn't it?  :-\

I am not so sure they would act retrospectively and not so sure that they would go for the major players. Ethereum may pass the Howey under certain opinions, tokens that are on the chain have three foot long disclaimers. Even on some cases that looked very clearly as fraud, the SEC did nothing. It is annoyingly surprising that they would want to intervene now that ICO have been going on for years. Is this kind of a preparation to start imposing a massive fine on the sector?

I believe it could also be a resource shortage. I don't think the SEC has hundreds of people sitting around doing nothing waiting for their next crack down of a crypto project. I think they pay attention to some of the major players and pick a project up for scrutinization here and there. If they wanted to check the whole space, we would be talking years I guess with everything that's part of the process. Lawyers involved, judges, back and forth communication and so on.

In the United States, a security is a tradable financial asset of any kind. Securities are broadly categorized into:

 ~   debt securities (e.g., banknotes, bonds, and debentures)
 ~   equity securities (e.g., common stocks)
 ~   derivatives (e.g., forwards, futures, options, and swaps)

Source : https://en.wikipedia.org/wiki/Security_(finance)

Securities are the traditional way that commercial enterprises use to raise new capital. So the question is... Who is the issuer of tokens and did they create this to raise new capital for their company or business? Can Crypto currencies be defined as a debt securities and/or equities ... The answer is no.

Governments are looking for reasons to stop the trading of something that are not regulated and something that can be regulated, but quickly circumvented by simply pushing this underground. (Dark markets and P2P trades)  ;D ;D

1. Because the securities laws are the securities laws. It's all out there, it's up to the people issuing securities to follow them. The SEC's role is to educate (there is plenty of information available on their website about how to issue securities under the securities laws) but more importantly protect investors from those not following the laws.

2. No, the SEC doesn't lose it's mandate to protect investors because technology moves fast.

3. There are clearly defined criteria about what constitutes a "security" that has been established through laws and litigation, including precedents set by the Supreme Court on the matter.

In short, the onus is on anyone issuing a token to follow the securities laws. Anyone selling tokens to the public to raise money to finance a project is selling unregistered securities.

Okay good, Bitcoin is not a sceurities, and they spared it for us. Thats enough for us to work with.
Even if rest of the crypto is declared as security and went under control of SEC then everyone will move into BTC and then it will bloom like saga on the beach!

Lets wish for the same. No more tweet confusions and no more hassle of asking what should be added into my basket?

But I hope this chair guy don't cheat us afterwards when he sees the BTC becoming lord of the fiat too.

The angle the SEC is taking here is not the only bullet authorities could fire against cryptocurrencies. They could also forbid merchants and banks to process cryptocurrency related transactions, but that should be more complicated for them to achieve and especially get confirmed in front of a court. What speaks in favor of any argument against cryptocurrencies is that they pose a threat to unexperienced retail traders who may lose a fortune during a situation like this. I think they will bring this up shortly.

This is the sensitive point. I didn't see much more than just telling that this or that is not OK. No fines, no nothing.


Nice answer, but far from the topic. Ethereum came live in 2015. SEC was telling about it in 2018. "technology moves fast"... but 3 years is a lot.


And what are the consequences for selling them unregistered? Because that's the bit I feel like it's missing. I've basically seen none... ::)

For the ones that do not understand, think of it like this : is there someone at the top of the coin you support?
If there is one that means it is most likely a security and not a crypto currency.

For example, if BCH is managed by Roger Ver and Jihan Wu (which it is) that is a security, if XRP is managed by a whole company that means it is a security, if USDT is run by tether company that is security, if Tron is managed by Justin sun that is security.

All of these are securities and not just a crypto and that is why there are different laws for each of them or there should be anyway, if there is one person at the head of a coin that coin becomes a company or a product of a company and that is why it should be legally different than stuff like bitcoin. Hell BNB is so centralized that even the validators are all binance owned, so it is purely security and not even a crypto currency at that point, how could it be legally same as bitcoin? Impossible.

Because you and I know that things are never that simple, in a perfect world the police will investigate a robbery even if only one dollar was stolen, but in the real world the police is not going to bother with such a small robbery and the same principle applies here.

This market is decentralized so the SEC cannot go against every single scammer or coin that is created as they simply do not have the resources to do so, but once they decide to take action then they will go against the big coins as those coins are an easier target than small icos.

Being an unregistered securities offering doesn't automatically make it a scam, it just makes it an unregistered securities offering. It's not illegal because it's a scam, it's illegal because it was not complying with the laws.  The laws were made to protect people from scams, but also from idiots who don't really know what they're doing.

There have been plenty of fines, I think you just haven't known where to look for them.  Here's a list of 70+ "cyber" related enforcement actions just recently.  Some of these actions are related to cyber issues other than crypto, but most of the entries in this list are crypto fines:  https://www.sec.gov/spotlight/cybersecurity-enforcement-actions


No, the answer is directly on point. You break the securities laws in a highly visible manner and the SEC will eventually get around to you.  The republicans slash the enforcement arms of the government to the bone whenever they're in power, so sometimes it takes awhile.  Three years is not a long time for highly complex securities cases, which crypto clearly is because it's so new.  It took a long time for the SEC to determine that ICOs fit the definition of securities offerings, and so now you're seeing the deluge of enforcement actions because of that, as evidenced by the link posted in the first response above.


See the first response, there may be more besides what's listed there, but that list in the first response is extensive.

This was the missing bit for my side. I stand corrected. And thank you.

Getting some distinct deja vu here.  Didn't we basically have this same topic three or four years ago?  I'm sure I remember someone saying the same thing a while back.  

Will do some digging...

//EDIT:

Yeah, I'm just remembering it was Gensler that said it in 2018, but it's behind a paywall now:  https://www.nytimes.com/2018/04/22/technology/gensler-mit-blockchain.html (https://www.nytimes.com/2018/04/22/technology/gensler-mit-blockchain.html)

So same opinion, but the difference now is he's in a position to act on it.

What's interesting is Jay Clayton while the chair of the SEC turned down every application for a bitcoin ETF.  Now that's he's left the SEC, he's accepted a role as an adviser to a company that is - get this- submitting an application for a bitcoin ETF.  Either he suddenly believes there should be a bitcoin ETF, or he'll do anything for money.  Just like all those republicans who oppose marijuana legalization while they're in Congress, and then when they're voted out they take board seats on companies pushing for legalization.  From the playbook of use the government to obstruct progress until you can personally profit from it.

It wasn't really a secret neither, I mean who didn't know about this anyway? Think about it, there is a company called Ripple that created a coin called XRP and they are just using that to get richer, how is that not securities? How in the hell would anyone think that it is totally independent crypto thing that had nothing to do with Ripple.

If it is a company behind a token or a coin and it is not totally decentralized, it is basically a securities, there is nothing else to go on about that. They may not be using it like securities, but it is still a securities and that's the end of it. We all knew this, he knew it way before he gained any power, I think he has been in favor of crypto but against these centralized versions for more than 3 years now, and I think it would still not be really that shocking to see him not do anything about it anyway.