SEC Chair Says a Lot of Crypto Tokens Are Securities

[Leviathan.007]

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

[NeuroticFish]

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."

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

[The Sceptical Chymist]

In 2018, Gansler stated that Ethereum and Ripple could fall within the scope of defining unregistered securities.

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.

[Sterbens]

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

[grabpopcorn536]

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.

[Tytanowy Janusz]

"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."

"
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.

[beerlover]

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.

[Argoo]

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

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.

[fiulpro]

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.

[wxa7115]

In 2018, Gansler stated that Ethereum and Ripple could fall within the scope of defining unregistered securities.

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.

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.

[hatshepsut93]

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.

[Darker45]

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.

[Sithara007]

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.

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.

[DrBeer]

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.

[mojun7982]

In 2018, Gansler stated that Ethereum and Ripple could fall within the scope of defining unregistered securities.

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.

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?

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. 

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.

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.

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.

[paxmao]

Yep, anyone can basically run a howey test 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.

[mojun7982]

Yep, anyone can basically run a howey test 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.

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.

[wxa7115]

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.

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.

[hatshepsut93]

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.

[magneto]

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.