Gary, tell us what is Ethereum?

[zasad@]

https://finance.yahoo.com/news/sec-chair-gensler-declines-ether-080521859.html
U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler refused to say whether ether (ETH), the second-largest cryptocurrency by market cap, was a security during a nearly five-hour hearing Tuesday.

One of the most contentious points in the hearing came early on, when McHenry asked Gensler to say if he thought ether was a security.


https://blockworks.co/news/regulatory-clarity-ethereum-gensler

McHenry asked Gensler some very specific questions, including this one, regarding Ether (ETH), the native token of the Ethereum blockchain.

“Clearly an asset cannot be both a commodity and a security. Do you agree?”

“Ummm, I… I… it’s… actually all securities are commodities under the Commodity and Exchange Act, it’s that we’re excluded commodities, but I would agree that a security cannot also be an excluded commodity and an included commodity, I’m sorry chair, just to talk about the Commodity Exchange Act, more precisely.”

McHenry did not appear to think this answer was an answer at all.

He followed up: “I’m asking you, sitting in your chair now, to make an assessment under the laws that exist: Is ether a commodity, or a security?”

“Without speaking to any one…” began Gensler.

“You’ve repeatedly said you won’t speak to one,” interrupted McHenry, “But you’ve spoken to one: bitcoin. So I’m asking you to speak to a second one, with the second largest market cap.”

“In speaking to the tokens,” Gensler replied, “There’s ten to twelve thousand, if there’s a group of entrepreneurs…”

“I’m asking about one,” interjected McHenry. “I’m asking you a specific question, Chair Gensler. I said this in private, this should be no shock to you that I’m asking this question. Is ether a commodity, or a security?”

Gensler: “And again, it depends on the facts and the law on if there’s a group of individuals…”

McHenry: “I’m asking about the facts and the law, sitting in your seat, and the judgment you are making.”

Gensler: “And so, Mr. Chair, I think you would not want me to prejudge…”

McHenry wasn’t having it. “But you have prejudged on this. You’ve taken 50 enforcement actions. We’re finding out as we go, as you file suit, as people get Wells notices on what is a security in your view and your agency’s view. I’m asking you a very simple question about the second-largest digital asset. What is your view?”

Once again, Gensler refused to answer. “And my view is, if there’s a group of individuals in the middle of it, the public is entitled…”

McHenry gave up and moved on.

https://korea.postsen.com/business/145169/US-SEC-Chairman-Avoids-Answering-Ethereum-Securities-at-Hearing-%3C-Blockchain-%3C-Main-article.html
Previously, Chairman Gensler argued that Ethereum, which was converted to Proof of Stake (PoS) after the merge upgrade, is a security. He cited the fact that the majority of all nodes operating Ethereum at the time were in the United States.

Live: Gensler Answers to House Financial Services Committee
https://blockworks.co/news/gensler-house-financial-services-committee

___
This is a real circus!

[darkangel11]

You should also listen to the part where he's being questioned by Waren Davidson, who not only makes Gensler sweat in his seat, but also proposes to remove him from his position.
In short, Gary Gensler is asked about suing Kim Kardashian for promoting EthereumMax, and he responds that it was a security and they reached a settlement. Davidson asks why did they go after one person who was promoting it and not after the coin and its creators because the coin is still trading.
It's obvious they went after an easy target that had money to pay the fine. The SEC is there to gather money from easy targets, it's not there to protect investors from scams.
The SEC also allowed coinbase to do its IPO, after stating that it's a platform where unregistered securities are being traded.


I'm biased here as a bitcoin holder, but Gensler is a strange guy. On one hand he is so into making it hard for any crypto company to function, on the other ha made it very easy for the biggest scam exchange on the planet (FTX) to prosper and SBF was allowed to do what he wanted. This guy is prejudiced, incompetent, and tries to find a way to make the 100 year old laws to work for new investment vehicles, which cannot work.

[Poker Player]

It is clear to me that it is a security, so I don't know why he said it clearly before but avoided saying it in that appearance. Basically Bitcoin is a commodity because it does not depend on a central authority and the supply cannot be increased at will, something similar to what is happening with gold and other commodities.  Obviously this is not the case with Ethereum and shitcoins, which are more like bonds issued by a company, which are dependent on a central authority, that company, and can be increased at will.

[zasad@]

I do not believe that Gary Gensler will be removed from his position because of his actions with cryptocurrencies.
Those who agree with the SEC will pay a small fine, which, according to the SEC, will be adequate and continue their business, and those who do not agree will get big problems in court. It’s most convenient to search not where you lost it, but where it’s light

One night a policeman found a man searching for his keys under a streetlight. He joined to help, only to realize after hours of searching, that the man had lost his keys in the park.

“Then why are you searching here?” asked the policeman.

“Because this is where the light is,” replied the man.

[Baofeng]

Lol, but yes, I do agree, he is really a big disappointment being chair of the SEC.

On the other hand, what do you think of him not owning any crypto or at least Bitcoin? is he lying under oath? I'm asking because prior to being nominated at this position, he uses to teach about blockchain.

He has taught classes about blockchain, digital currencies, and other financial technologies, and won the MIT Sloan Outstanding Teacher Award for the 2018-19 academic year. Gensler first joined the Institute in 2018.

https://news.mit.edu/2021/gary-gensler-nominated-chair-sec-0119

It's hard to believed that a individual who has knowledge about digital currencies will not at least own something during that time, hehehehe.

[pawel7777]

I think nothing has damaged the SEC's reputation as badly as this whole crypto-security-or-not situation.
Remember that Gensler is just a face for the SEC, but it's not like he's solely responsible for the lack of clear policies. There's something deeper going on there for sure.
I think they're just trying to assess the implications of deciding either way. But I won't be surprised if they throw Gensler under a bus eventually to try to regain credibility.

Meanwhile, a Coinbase finally lost their patience and decided to sue SEC in hopes to get the court to force SEC to give Coinbase a clear answer to their petition (after being ignored for months).
https://www.cnbc.com/2023/04/24/coinbase-sues-sec-after-months-of-silence-from-federal-regulator.html

[zasad@]

I think nothing has damaged the SEC's reputation as badly as this whole crypto-security-or-not situation.
Remember that Gensler is just a face for the SEC, but it's not like he's solely responsible for the lack of clear policies. There's something deeper going on there for sure.
I think they're just trying to assess the implications of deciding either way. But I won't be surprised if they throw Gensler under a bus eventually to try to regain credibility.

Meanwhile, a Coinbase finally lost their patience and decided to sue SEC in hopes to get the court to force SEC to give Coinbase a clear answer to their petition (after being ignored for months).
https://www.cnbc.com/2023/04/24/coinbase-sues-sec-after-months-of-silence-from-federal-regulator.html

The SEC rejected the petition of the Coinbase exchange, and what will the exchange achieve from the court's decision?
SEC will provide a formal answer, in which there will be no clear information.This won't stop the SEC from terrorizing other crypto exchanges.
If there are no changes, then the SEC policy is correct.

[pawel7777]

The SEC rejected the petition of the Coinbase exchange, and what will the exchange achieve from the court's decision?
SEC will provide a formal answer, in which there will be no clear information.This won't stop the SEC from terrorizing other crypto exchanges.
If there are no changes, then the SEC policy is correct.

What do you mean by rejected the petition? I believe the court has ordered SEC to provide response to Coinbase:
https://www.coindesk.com/business/2023/05/04/us-court-orders-sec-to-respond-to-coinbase-allegations-within-10-days/
I don't think they have responded already, at least I can't find any info on that. And if they provide an official response but fail to clarify anything (not sure if they can do it), then, I'd imagine it would work in favour of Coinbase, should SEC decide to start a lawsuit against them.
Some lawyers already predict that SEC will lose in court:
https://news.bitcoin.com/lawyer-expects-sec-to-lose-if-it-sues-coinbase-due-to-fatal-flaw-of-gary-genslers-own-making/

[zasad@]

The SEC rejected the petition of the Coinbase exchange, and what will the exchange achieve from the court's decision?
SEC will provide a formal answer, in which there will be no clear information.This won't stop the SEC from terrorizing other crypto exchanges.
If there are no changes, then the SEC policy is correct.

What do you mean by rejected the petition? I believe the court has ordered SEC to provide response to Coinbase:
https://www.coindesk.com/business/2023/05/04/us-court-orders-sec-to-respond-to-coinbase-allegations-within-10-days/
I don't think they have responded already, at least I can't find any info on that. And if they provide an official response but fail to clarify anything (not sure if they can do it), then, I'd imagine it would work in favour of Coinbase, should SEC decide to start a lawsuit against them.
Some lawyers already predict that SEC will lose in court:
https://news.bitcoin.com/lawyer-expects-sec-to-lose-if-it-sues-coinbase-due-to-fatal-flaw-of-gary-genslers-own-making/

I thought that the SEC would not respond to the petition without the decision of the Court. I do not want to rush things, but I do not understand how the SEC will clarify its position in 10 days?
The main game is played in closed meetings, and I am inclined to think that an agreement will be reached between the exchange and the SEC. Both sides don't need a long legal process.

Court in the US is very expensive. What if Ripple wins..

Ripple will have spent $200 million fighting SEC lawsuit, CEO says

[pawel7777]

I thought that the SEC would not respond to the petition without the decision of the Court. I do not want to rush things, but I do not understand how the SEC will clarify its position in 10 days?

No idea how this is going to unfold, but I think there's a zero chance the SEC will provide any clear rules. I expect they'll either provide a vague response, or just won't respond at all. What's the worst that could happened to them if they don't? They get fined and pay with tax payers' money?
Anyhow, they have time till 13th May, so only 2 days from now.
Apparently, some crypto-groups are piling in in support of Coinbase:
https://www.coindesk.com/policy/2023/05/11/coinbases-sec-complaint-draws-allies-depicting-us-regulator-as-crypto-bully/

and here's the Coinbase's petition:
https://www.sec.gov/rules/petitions/2022/petn4-789.pdf

[zasad@]

I thought that the SEC would not respond to the petition without the decision of the Court. I do not want to rush things, but I do not understand how the SEC will clarify its position in 10 days?

No idea how this is going to unfold, but I think there's a zero chance the SEC will provide any clear rules. I expect they'll either provide a vague response, or just won't respond at all. What's the worst that could happened to them if they don't? They get fined and pay with tax payers' money?
Anyhow, they have time till 13th May, so only 2 days from now.
Apparently, some crypto-groups are piling in in support of Coinbase:
https://www.coindesk.com/policy/2023/05/11/coinbases-sec-complaint-draws-allies-depicting-us-regulator-as-crypto-bully/

and here's the Coinbase's petition:
https://www.sec.gov/rules/petitions/2022/petn4-789.pdf

I don't think anything will happen on March 13th.
Unlike competitors who are closing business in the US, the Coinbase exchange is doing great. It is a fact.
If the Coinbase exchange is sued, then this is a different situation, but for now, the SEC has rid Coinbase of competitors in the USA

[pawel7777]

I don't think anything will happen on March 13th.
Unlike competitors who are closing business in the US, the Coinbase exchange is doing great. It is a fact.
If the Coinbase exchange is sued, then this is a different situation, but for now, the SEC has rid Coinbase of competitors in the USA

/tinfoil hat on/ Could it be that it's all just a show to kill off competition and make sure that no foreign entity (especially Binance) gets any significant share of the crypto market?

Coinbase is also active in expanding its overseas operations, the question is whether they do that just to grow, or as a hedge against a potential heavy crypto crackdown in the US.

And I wouldn't say they're doing that great. In the first quarter of 2023, they recorded an operating loss of £124m and a net loss of $79m. Unless we look at their (non-statutory) adjusted EBITDA, which is looking pretty good: +$284m Vs. +$20m (first quarter of 2022).

[zasad@]

I don't think anything will happen on March 13th.
Unlike competitors who are closing business in the US, the Coinbase exchange is doing great. It is a fact.
If the Coinbase exchange is sued, then this is a different situation, but for now, the SEC has rid Coinbase of competitors in the USA

/tinfoil hat on/ Could it be that it's all just a show to kill off competition and make sure that no foreign entity (especially Binance) gets any significant share of the crypto market?

Coinbase is also active in expanding its overseas operations, the question is whether they do that just to grow, or as a hedge against a potential heavy crypto crackdown in the US.

And I wouldn't say they're doing that great. In the first quarter of 2023, they recorded an operating loss of £124m and a net loss of $79m. Unless we look at their (non-statutory) adjusted EBITDA, which is looking pretty good: +$284m Vs. +$20m (first quarter of 2022).

I recently found this information. The SEC has been interpreting the law to their advantage for many years. Let's see what happens with this petition.

https://in.investing.com/news/cci-files-an-amicus-brief-on-sec-seeking-response-to-coinbases-petition-3641431
"Though receiving five rulemaking petitions from Coinbase over the past 5 years, SEC ignored responding for their Securities and Exchange Act clarity. So far, there is no proper approach initiation to rulemaking policies from SEC. By withholding the petition, SEC thwarts the regulation-by-enforcement actions awarding judicial review.

Seeking Clarity From SEC

Since the SEC lacks regulatory clarity, several U.S.-based organizations might shift their jurisdictions with the clarified frameworks to other countries possibly. Meanwhile, the countries like European Union (EU) and the United Kingdom (UK) work towards the active participation of technical leadership seeking foster innovation and safeguard market participants. To mention, the EU has cleared the ‘Markets in Crypto Act’ recently. "

[darkangel11]

Coinbase is also active in expanding its overseas operations, the question is whether they do that just to grow, or as a hedge against a potential heavy crypto crackdown in the US.

I don't think there's going to be one, since bitcoin became a political leverage. Look what's going on on the political scene in the US. They're starting their presidential campaigns and a some candidates are using bitcoin to show they support financial freedom and civil liberties. At the same time some states make bitcoin mining legal, while other states ban CBDC.
Every politician gets asked these hard question, like where do you stand when it comes to capital punishment, gun laws, women rights. Now bitcoin is becoming one of these questions that candidates need to have an opinion on and these people are old, they don't understand it and can't make a solid argument for banning it. A great example is Brad Sherman. He's against bitcoin, but take a moment and listen to his points. Maybe he could convince my elderly father that he knows what he's talking about, but most tech-savvy people will laugh at him.

Here's how people react to him. Every time he says something about bitcoin it gets ridiculed.
https://twitter.com/BradSherman/status/1382871291443699714

So, I don't think a crackdown is coming. Gensler is trying to make it look like he wasn't involved in FTX scam, by attacking those who promoted FTX and legit crypto companies who want to provide services in the US, and a few politicians are lobbying against bitcoin because they probably own bank stocks and/or are involved in CBDC implementation.

[bittraffic]

I don't think anything will happen on March 13th.
Unlike competitors who are closing business in the US, the Coinbase exchange is doing great. It is a fact.
If the Coinbase exchange is sued, then this is a different situation, but for now, the SEC has rid Coinbase of competitors in the USA

/tinfoil hat on/ Could it be that it's all just a show to kill off competition and make sure that no foreign entity (especially Binance) gets any significant share of the crypto market?

Coinbase is also active in expanding its overseas operations, the question is whether they do that just to grow, or as a hedge against a potential heavy crypto crackdown in the US.

And I wouldn't say they're doing that great. In the first quarter of 2023, they recorded an operating loss of £124m and a net loss of $79m. Unless we look at their (non-statutory) adjusted EBITDA, which is looking pretty good: +$284m Vs. +$20m (first quarter of 2022).

I recently found this information. The SEC has been interpreting the law to their advantage for many years. Let's see what happens with this petition.

https://in.investing.com/news/cci-files-an-amicus-brief-on-sec-seeking-response-to-coinbases-petition-3641431
"Though receiving five rulemaking petitions from Coinbase over the past 5 years, SEC ignored responding for their Securities and Exchange Act clarity. So far, there is no proper approach initiation to rulemaking policies from SEC. By withholding the petition, SEC thwarts the regulation-by-enforcement actions awarding judicial review.

Seeking Clarity From SEC

Since the SEC lacks regulatory clarity, several U.S.-based organizations might shift their jurisdictions with the clarified frameworks to other countries possibly. Meanwhile, the countries like European Union (EU) and the United Kingdom (UK) work towards the active participation of technical leadership seeking foster innovation and safeguard market participants. To mention, the EU has cleared the ‘Markets in Crypto Act’ recently. "

It's Coinbase that is catching up with Binance actually. It's not about the competition that coinbase plans to go offshore, it's the regulatory clarity.

Crypto businesses in the continent are really not going anywhere with such regulation, it's not just them that making it hell as Binance is also moving out of Canada because of the ridiculous regulations they've come up with. Canadian Securities Administrators (CSA) prohibits exchanges from owning stablecoin without approval. https://www.coindesk.com/business/2023/05/12/binance-announces-exit-from-canada-citing-regulatory-tensions/

[zasad@]

About the SEC lawsuit against Binance
https://bitcointalk.org/index.php?topic=5439961.msg62369023#msg62369023

"It also follows from the lawsuit that in addition to the two crypto assets associated with Binance, the regulator also equates Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland coins to securities (MANA), Algorand (ALGO), Axie Infinity (AXS) and COTI (COTI)."

Read more on RBC:
https://www.rbc.ru/crypto/news/647dfc049a79472d66d87fa2
original
https://www.docdroid.net/I02zzqT/sec-v-binance-4-pdf#page=2

Gary, where is Ethereum?


It is strange that Polkadot is not on the list.

[NotATether]

McHenry asked Gensler some very specific questions, including this one, regarding Ether (ETH), the native token of the Ethereum blockchain.

“Clearly an asset cannot be both a commodity and a security. Do you agree?”

“Ummm, I… I… it’s… actually all securities are commodities under the Commodity and Exchange Act, it’s that we’re excluded commodities, but I would agree that a security cannot also be an excluded commodity and an included commodity, I’m sorry chair, just to talk about the Commodity Exchange Act, more precisely.”

Why can't he just make up his mind, considering that he has no problem listing a slew of other cryptos as securities.

Hell, why don't they make some framework on what makes a crypto a security in the United States (the Howey Test is not specific enough)?

This kind of waffling is really going to end badly for Gensler and the SEC since basically the entire crypto industry has turned on them.

Instead of fighting scams they are busy debating what is a security or not. Cybercriminals win.

[zasad@]

Why can't he just make up his mind, considering that he has no problem listing a slew of other cryptos as securities.

Hell, why don't they make some framework on what makes a crypto a security in the United States (the Howey Test is not specific enough)?

This kind of waffling is really going to end badly for Gensler and the SEC since basically the entire crypto industry has turned on them.

Instead of fighting scams they are busy debating what is a security or not. Cybercriminals win.

People like Gary Gensler do not act on their own, most likely this is an indication to remove unnecessary business from the USA. And since there is still no detailed explanation of which project is a security and which is not, the SEK can file many more lawsuits in court. They do not have enough people to sue all projects and crypto exchanges.

[pawel7777]

Hell, why don't they make some framework on what makes a crypto a security in the United States (the Howey Test is not specific enough)?

Because it's all about the power, not about protecting investors. By doing that, SEC would be reducing their power. Without clear rules, they have a power to strike at any time at any crypto, or the entire industry if they wish to.

This kind of waffling is really going to end badly for Gensler and the SEC since basically the entire crypto industry has turned on them.

Sadly, the crypto industry has no strong lobby and is politically irrelevant. But even if they were, as SEC is deemed an independent body, Gensler's position is pretty safe, as long as he doesn't go against the SEC's Commissioners (who appointed him).

Moreover, SEC's actions are in line with the current administration's crackdown on crypto, known as "Operation Choke Point 2.0".

[zasad@]

Hell, why don't they make some framework on what makes a crypto a security in the United States (the Howey Test is not specific enough)?

Because it's all about the power, not about protecting investors. By doing that, SEC would be reducing their power. Without clear rules, they have a power to strike at any time at any crypto, or the entire industry if they wish to.

This kind of waffling is really going to end badly for Gensler and the SEC since basically the entire crypto industry has turned on them.

Sadly, the crypto industry has no strong lobby and is politically irrelevant. But even if they were, as SEC is deemed an independent body, Gensler's position is pretty safe, as long as he doesn't go against the SEC's Commissioners (who appointed him).

Moreover, SEC's actions are in line with the current administration's crackdown on crypto, known as "Operation Choke Point 2.0".

Ethereum does not appear anywhere in court cases and no one from this company has been subpoenaed. The SEC hopes to win the case and wants to set a legal precedent. And then the decision of the court will become law and no one will be able to change the rules. Probably, the court cases will end before the US has a law to regulate cryptocurrencies.