SEC Never Classified Bitcoin or Ethereum as Securities: Gary Gensler

Outgoing U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler has insisted that the regulatory body never classified Bitcoin and Ethereum as securities.

Additionally, he separated the world’s largest cryptocurrency by market cap from other tokens, saying they still have to prove their actual value.

A Clear Distinction for Bitcoin, Ethereum

Gensler made the statements in exit interviews with Yahoo Finance and CNBC’s Squawk Box, where he reflected on his tenure, which ends as the Trump administration prepares to take office.

Speaking with Yahoo Finance’s Jennifer Schonberger, the agency head made it clear that the SEC had never classified BTC and ETH as securities.

“My predecessor and I, we’ve never said Bitcoin is a security. We haven’t said Ethereum is a security,” Gensler declared.

Interestingly, his assertions appear contradictory, especially regarding Ethereum. A filing from April 2024 revealed that the agency had believed for at least a year that ETH was an unregistered security that had been trading in violation of pertinent laws.

However, there seems to be no ambiguity regarding Bitcoin, with Gensler reiterating its status on his CNBC appearance, stating that BTC did not fall under securities laws, unlike tens of thousands of other tokens in the market.

Asked why he had not clarified the status of ETH and BTC outright, Gensler claimed that his job required him to be extremely careful with his language.

While the Biden appointee described Bitcoin as “highly speculative,” he still acknowledged that, given its growing popularity worldwide, it could become an asset similar to gold in the future.

However, he had no kind words for other cryptocurrencies, claiming they first had to show their true use case and value proposition:

“These other thousands of projects need to show their use case and show that they actually have fundamentals underlying them, or they won’t persist.”

Criticism of the SEC’s Approach

One of the most contentious aspects of Gensler’s term was the SEC’s enforcement-heavy approach to crypto regulation. Critics have argued that the agency has focused more on penalizing non-compliance than providing clear rules for the industry.

Asked about this by CNBC’s Andrew Sorkin, the Commission’s leader shifted the onus for crafting new regulatory frameworks to Congress. Additionally, he decried the high levels of noncompliance by crypto projects, many of which he claimed fell under the securities laws.

On the recent appellate court’s demand that the SEC better explain why it turned down Coinbase’s request for the agency to develop crypto-specific rules, the former MIT professor stated, “Not liking the law and not liking rules doesn’t mean there aren’t laws and rules.”