SEC’s Gary Gensler dodges question on whether Ethereum is a security

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Securities and Exchange Commission (SEC) Chair Gary Gensler did not give a direct answer when asked whether Ether, the native cryptocurrency of the Ethereum blockchain, is a security or a commodity at a congressional oversight hearing on Tuesday.

Gensler directly addressed the House Financial Services Committee (HFSC) for the first time since October 2021, which was before the collapse of FTX and crypto-friendly banks, including Signature, Silicon Valley Bank, and Silvergate.

Gensler did not give a clear and direct answer to Congressman Patrick McHenry, the committee chairman, who asked if Ether, the second-largest cryptocurrency by market capitalization, is a security.

“Actually, all securities are commodities under the Commodity Exchange Act. It’s that we are excluded commodities. But I would agree that a security cannot be also an excluded commodity and an included commodity,” responded Gensler.

Regulators and prosecutors have held contrasting views on how to classify Ether. The Attorney General of New York recently called it should be a security, but the Commodity Futures Trading Commission Chair Rostin Behnam argued that it is a commodity.

Gensler hinted on multiple occasions that he may view cryptocurrencies based on the proof-of-stake consensus mechanism, such as Ether, as securities.

In May 2022, Gensler publicly labeled Bitcoin, the world’s largest cryptocurrency by market cap, as a commodity.

Gensler told the HFSC on Tuesday that the SEC needs more resources and bodies to regulate the crypto asset class.

Late last month, Gensler testified before the Subcommittee on Financial Services and General Government and requested US$2.4 billion in funding from Congress for the agency to intensify its cryptocurrency crackdown.