The story with the SEC’s regulation of cryptocurrencies looks rather comical. First of all, the agency uses securities laws from the 1930s to regulate the industry. They are not up-to-date, so perceiving digital assets through their prism is a questionable initiative in itself.

In recent years, the SEC under Gary Gensler has failed to create new rules to regulate coins, creating problems for developers. In such an environment, companies are required to register their own tokens as securities, but how exactly to do so is not specified by the regulator. And that doesn't stop the Commission from banning certain services from cryptocurrency exchanges and fining them tens of millions of dollars.

However, that’s not all. In February 2023, Gary Gensler clearly stated that all cryptocurrencies and tokens except Bitcoin are allegedly securities, a statement that could be characterized as exceeding his own authority. However, during a hearing before the House Financial Services Committee in April, Gensler failed to call Etherium a security, even though he was asked about it directly.

The irony here is that before taking up his new position at the SEC, Gary openly said that he didn’t see ETH as a security.

Is Etherium a security?

Etherium is the market’s second most capitalised cryptocurrency after Bitcoin. Naturally, the coin’s situation has a noticeable impact on other altcoins, so the determination of ETH’s status by a key US regulator is critical to the industry as a whole.

When Gensler was teaching at MIT, his stance on Etherium was quite unequivocal. This can easily be determined by the following quote from his lecture, which is once again popular on Twitter.

In 2018, the Securities and Exchange Commission said that regardless of what it might have been in 2014, the system is now decentralised enough that Etherium cannot be considered a security.


By the way, this is not the first time Gensler has been caught up in a double standard. Last week, digital asset lovers on Twitter also found an archived video in which the current SEC chairman shared his own attitude towards crypto. At the time, he stated that "three-quarters of the crypto market is not securities". In his view, digital assets refer to commodities, that is, money in the form of crypto. Gary's current position, however, is the exact opposite.


Gensler, who was a civilian at the time and only spoke in his capacity as a professor, was apparently just relaying the views of the SEC management, published in 2018. In particular, these are the words of former director of corporate finance William Hinman – he gave a speech in June of that year in which he declared that Etherium was “sufficiently decentralised”.

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The double standard has not gone unnoticed by cryptocurrency enthusiasts on Twitter. Along with this, Gensler’s recent argument with Congressman Patrick McHenry during the SEC chairman’s appearance before the House Oversight Committee in Congress also gained popularity. Gensler was asked for his opinion on whether Etherium should be classified as a security. However, even after mentioning those very 2018 Hinman comments, he refused to answer the question directly.

According to Decrypt’s sources, the video of Gensler lecturing at MIT in 2018 was previously reposted on his page by the CEO of America’s largest cryptocurrency exchange, Brian Armstrong. And that’s quite a development, as the SEC had previously sent Coinbase a Wells notice – a message that the agency was going to sue the company.

At the same time, Coinbase executives believe that such actions could cause significant reputational damage to the regulator. Therefore, the platform would like to avoid a lawsuit.

It is important to note that this is not the first time Gensler himself has refused to give a clear definition of Etherium. Notably, in an interview with CNBC last year, the SEC chairman also went out of his way to give a clear answer to the question. Gary’s lack of understanding of what is going on is therefore generally not surprising.

In general, Gensler’s public behavior regarding cryptocurrencies shows how unsatisfactory the US system of regulating digital assets is. First, the SEC needs to define what cryptocurrencies are and then try to apply any sanctions against blockchain companies. Otherwise, what is happening in the industry could be described as harassment, which is certainly not good for the popularity of this jurisdiction among entrepreneurs.


The current situation makes it clear how politicised Gary Gensler's attitude towards cryptocurrencies is. And that's too bad, because just four years ago he viewed digital assets very differently and didn't see them as a problem for regulators. And now his viewpoint has become completely different, leading to lawsuits, fines, and a deterioration of the US reputation as a market for blockchain assets, among other things. The only thing left to do here is to hope that other officials can take charge of the situation and put Gary in his place.


Look for even more interesting stuff in our cryptochat of former rich people. We’ll talk about other important topics related to the blockchain and decentralisation industry there too.