- SEC Chair Gary Gensler told CNBC Wednesday that many crypto assets are considered securities.
- “If somebody is raising money selling a token and the buyer is anticipating profits based on the efforts of that group to sponsor the seller, that fits into something that’s a security,” said Gensler.
- His comments add to a discussion over what kinds of digital assets are considered securities.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
SEC Chair Gary Gensler told CNBC Wednesday that many crypto assets are considered securities, a definition that would place hundreds of coins within the $1.6 million cryptocurrency market under the agency’s jurisdiction.
“If somebody is raising money selling a token and the buyer is anticipating profits based on the efforts of that group to sponsor the seller, that fits into something that’s a security,” said Gensler. “I’m not going to go token by token, you can imagine why I wouldn’t do that. But my predecessor, Jay Clayton…said it best about three years ago that he really hadn’t seen many tokens that didn’t meet that securities test.”
There has been much discussion over the years about which kind of digital assets are considered securities and would therefore fall under the SEC’s purview. Bitcoin, for example, is considered a commodity under the Commodity Exchange Act. But there are thousands of other coins in the ecosystem, and Gensler said many of them should be considered securities for the purposes of regulatory oversight.
The issue is at the heart of the SEC’s lawsuit against Ripple. Ripple claims its XRP token is a commodity and out of the regulator’s reach, while the SEC says Ripple ran an unregistered securities offering. Gensler declined to comment on Ripple when asked by CNBC’s Andrew Ross Sorkin about the status of the company.
Gensler was formerly the chairman of the Commodity Futures Trading Commission, and he said it’s critical both government agencies work together to deal with crypto platforms that trade both securities and commodities.
The SEC chief also encouraged crypto trading platforms to have a “frank discussion” with the securities regulator. He noted that many have avoided confronting the SEC so far.