US Securities and Exchange Commission (SEC) Chair Gary Gensler recently reiterated that Bitcoin is not considered a security, providing a key clarification amidst the ongoing regulatory scrutiny facing the cryptocurrency industry. In an interview on CNBC’s Squawk Box on Sept. 26, Gensler emphasized that Bitcoin is classified as a commodity under US law, stating that both he and his predecessor have confirmed this stance.
This statement comes on the heels of the SEC’s approval of several spot Bitcoin exchange-traded funds (ETFs), enabling the digital asset to be traded on major US exchanges like the Nasdaq. While Bitcoin’s regulatory status is clear, Gensler took the opportunity to criticize the broader crypto industry for its widespread disregard for existing regulations. He pointed out that many market participants are choosing to ignore rules and are seeking exemptions from compliance, leading to instability and confusion within the market.
In contrast to Bitcoin, Ethereum, the second-largest cryptocurrency, faces a more ambiguous regulatory environment. The SEC has yet to definitively classify Ethereum as either a security or a non-security, leaving projects built on its blockchain under ongoing scrutiny. Despite this uncertainty, the SEC has approved Ethereum-based ETFs while simultaneously launching investigations into companies associated with the Ethereum ecosystem, such as Consensys and Uniswap.
Gensler’s regulatory approach towards Ethereum has sparked criticism from members of Congress, particularly in the House of Representatives. Lawmakers have expressed frustration over the SEC’s handling of crypto regulations, with some arguing that the agency’s actions have hindered innovation. Even other SEC Commissioners like Hester Peirce and Mark Uyeda have echoed these sentiments, stating that the regulator has failed to provide clarity despite having the necessary tools to do so.
Despite the pushback, Gensler remains steadfast in his belief that a stronger regulatory framework is essential for the future of the crypto industry. He emphasized the importance of building investor trust in the markets to ensure longevity and sustainability. Drawing parallels to other industries, Gensler highlighted the necessity of regulations, likening them to “traffic lights and stop signs” that are crucial for progress.
The SEC’s clear classification of Bitcoin as a commodity contrasts with its ongoing scrutiny of other digital assets, leaving the regulatory landscape of the broader crypto market uncertain. As the industry continues to evolve, the role of regulatory frameworks in shaping its future remains a topic of ongoing debate and discussion.