Gary Gensler Discusses the Status of Ethereum: Will It Be Considered a Security by the SEC?

In the cryptocurrency scene in the United States, a persistent question has captured the attention of investors and enthusiasts: is Ethereum considered a security or security by the US Securities and Exchange Commission (SEC)? SEC Chairman Gary Gensler recently addressed this question, but chose to remain evasive.

During an interview on Bloomberg TV, Gensler was asked to clarify whether the SEC sees Ethereum, one of the market’s leading cryptocurrencies, as a security. His response was to postpone any verdict on the matter. Regarding these crypto tokens, it depends on the facts and circumstances whether the investing public is expecting profits based on the efforts of third parties,” he explained, reiterating that the SEC would not comment on specific cases.

The SEC’s position gains relevance given the growing interest in an Ethereum ETF in the United States. Recently, the decision on the approval of the iShares Ethereum Trust, proposed by investment giant BlackRock, was postponed, following the same fate as previous applications from companies such as Fidelity, Invesco and Galaxy Digital. According to Bloomberg ETF analyst James Seyffart, the SEC is expected to continue postponing these decisions until a deadline in May.

This cautious approach is not new for the SEC, which has previously shown hesitation in approving Bitcoin ETFs, despite approving some following court orders requiring review of certain requests. Gensler emphasized that the approval of Bitcoin ETFs does not indicate a willingness to approve crypto assets generally, warning investors of the associated risks.

Gensler also discussed the speculative nature of cryptocurrencies, questioning the intrinsic value and use of thousands of tokens available on the market. He suggested that some of these tokens could be classified as securities, depending on investors’ expected profits based on the efforts of entrepreneurs.

Before joining the SEC, Gensler had commented that Ethereum was not viewed as a security by the SEC, referring to a 2018 speech by then-SEC Director of Corporate Finance William Hinman. Hinman had mentioned that Ethereum was “sufficiently decentralized” to not be considered a security at that time.

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The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.