Apr 26, 2023
Gensler’s Crypto Hypocrisy Sparks Outrage
The crypto community has expressed surprise and outrage after a 2018 video emerged of Gary Gensler, the current head of the United States securities regulator, stating that cryptocurrencies are on par with commodities or cash and are not securities.
The video was taken from a “Blockchain and Money” class in the Fall Semester of 2018 taught by Gensler, a former professor at the Massachusetts Institute of Technology (MIT) before he became chair of the Securities and Exchange Commission (SEC).
In the video, Gensler said that “three-quarters of the market are not ICOs or not what would be called securities” and named the U.S., Canadian and Taiwanese markets as the “three jurisdictions that follow something similar to the Howey Test.”
“Three-quarters of the market is non-securities, it’s just a commodity, cash,crypto,” Gensler then said.
The clip was shared on Twitter, where it quickly caused a stir in the crypto community. Coinbase CEO Brian Armstrong was among those who responded to the post, simply commenting “Wow”. Erik Voorhees, the founder of crypto trading platform ShapeShift, asked “When does someone get arrested for fraud?” in a tweet to his 658,900 followers. Farokh Sarmad, the founder of Web3 podcast Rug Radio, called Gensler “disgusting” in a tweet to his 346,200 followers, while a systems engineer, named “JD” called on the SEC Chair to provide an explanation behind the change in opinion.
U.S. lawyer Preston Byrne attempted to explain the discrepancy between Gensler’s past and present views by stating that professors and law enforcers work in “different capacities” and Gensler shouldn’t be held to the same views he had back then. Jonathan Schmalfeld, a U.S. lawyer who specializes in blockchain technology, disagreed with Byrne’s opinion by stating that Gensler’s interpretation of the Howey Test shouldn’t change by virtue of his capacity.
The emergence of the video has raised questions about Gensler’s stance on crypto regulation, and the implications it has for the future of the industry. Gensler’s comments have also drawn attention to the importance of NFTs, which have become increasingly popular in the crypto space as a way to promote and sell digital assets.
The SEC has yet to provide any clarity on the matter, leaving the crypto world in a state of uncertainty. It remains to be seen whether Gensler will continue to take a hardline stance on crypto regulation or if his view will evolve to match his past opinion. Regardless, the crypto community is sure to be watching closely as the situation develops.
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