SEC: for Gensler “everything that is not Bitcoin” is a security token

A few days ago, Gary GenslerPresident of the American Security Exchange Commission (SEC), or the body that supervises securities and markets, declared that Bitcoin is not a security, but a commodity and would therefore fall under the competence of the Commodity Futures Trading Commission (CFTC).

This isn’t big news as the SEC has moved on similar positions in the past, but what’s new is that Gensler also stated that “everything other than Bitcoin is a stock.” If this were true, all cryptocurrencies, excluding BTC, would be classified as security tokens and therefore would follow a completely different regulation from the current one.

Any decision by the SEC in this sense could be followed by that of all the other countries, which have often and willingly looked to the USA as a point of reference for regulation.

All that would cause a domino effect given that all the tokens already launched, the ICOs/IEOs that have raised funds and so on would have to change their strategies because this type of regulation would obviously also apply retroactively.

It follows that, if the SEC were to adopt a much more aggressive approach to the regulation of cryptocurrencies, this would have strong repercussions on the market and on all companies operating in the sector.

What exactly is a security?

In the United States, the Securities Act of 1933 defines a security as any investment contract, note, stock, or any other type of investment in a joint venture with the expectation of obtaining profits solely from the efforts of others. In simpler terms, it is an asset that represents an ownership interest or a right to receive future profits or cash flows from a third party.

The opinions of crypto experts

Obviously, many entrepreneurs and investors in the crypto world believe that Gensler’s point of view is not in line with many digital assets, which instead are currently identifiable as so-called “utility” tokens, i.e. with utilities that go beyond investment .

Grace ChenManaging Director of the Bitget exchange, explained: “Last month, SEC Chairman Gary Gensler said in an interview with the New York Times that “all tokens, except BTC, are considered securities”. The issue of cryptocurrency regulation has been a hotly debated and unresolved topic. Currently, there is no law in the United States stating that ‘anything other than Bitcoin is a security’. For example, Jake Chervinsky, Chief Compliance Officer of the Blockchain Association, said the SEC does not have the authority to regulate any token, unless there is a court case. The President’s statement is based on the belief that all tokens, except BTC, have operating entities and corresponding websites that support them. The issued tokens can be sold as investments, and investors hope to invest in tokens through the project’s operations to obtain value, which is in line with the SEC’s definition of securities. In addition, individual investors in the US have suffered significant losses following events such as the Terra crash, the FTX bankruptcy and the Silverbank run, and the SEC has come under significant external pressure and is held accountable for inadequate regulation. On March 9, Rostin Behnam, chairman of the US Commodity Futures Trading Commission (CFTC), believed that ETH is also a commodity, and ETH futures products have long been subject to the CFTC. He also said that stablecoins will be regulated as commodities. It is evident that the CFTC and the SEC have different expectations regarding the regulatory reach of cryptocurrencies, and this debate is meaningless. The US Congress needs to pass legislation on this matter to define the jurisdiction of the CFTC and the SEC regarding the regulation of cryptocurrencies. Personally, I believe that the cryptocurrency regulation debate is an important topic that needs to be addressed by the government. It is essential to establish a clear regulatory framework to protect investors and foster innovation in the cryptocurrency market. The SEC and CFTC’s differing views on token classification demonstrate that there is a lot of attention on the topic and it is imperative that lawmakers act carefully.”