His congressional testimony was a joke. How that man still has the job of SEC chief is quite the mystery. Being CFO of Hillary Clinton’s 2016 campaign is probably a factor.
On one hand, yes, Ethereum is obviously a security, it raised money from investors to make a thing, and investors expected to get rich off it.
On the other hand, Ethereum is currently regulated as a commodity by the CFTC.
If he says Ethereum is a security, then there's a political mess.
If he says Ethereum is a commodity, then it breaks down the SEC's case for all the crypto projects out there that's basically stock IPOs but with a thin crypto layer on top.
I would not impute his credentials, he was a partner at Goldman Sachs and was chair of CFTC under Obama. He was involved in crafting a great deal of policy after 08 around the new regulations for financial institutions. He's not stupid, he's clearly a better person for the job than most of the people here on HN.
That certainly isn't a good outcome for Coinbase, though, so I can see why the crypto companies wish the SEC had a different suggestion.
Maybe it isn’t clear?
In the press, he says that "actors are not complying" but not being able to answer the most simple question (there are others more complex) is *not* playing in SEC favour.
Comply with what? Ethereum is the most used "crypto"-currency and the ecosystem players like Coinbase (a YC company) are right by saying they *can't* comply... they don't know what they are supposed to do despite asking repeatedly for years.
This whole congressional testimony as legal advice for your business makes no sense.
"great! how would they apply to this simple example?"
"lol, no I can't tell you that!"
You can say you don't like these rules or how they are applied but that's how they have been applied since their inception. This isn't new.
After, whatever decades of "the rules", new technologies have come along that have stumped "the rules". Now, the SEC has to deal with that. Instead of being an adult and having a good conversation, they are just kicking and screaming.
What's happening is that SEC is saying that you're breaking "the rules" (ie: Wells Notice to coinbase).
So, coinbase says... "ok, cool... what rules am i breaking?"
The response is: "lol, no I can't tell you that!"
So now Brian is in DC this week talking to regulators trying to get some clarity. He's posting all sorts of pictures of this on Twitter.
Let's see what happens.
If they're not able to argue why they're not breaking the law, then they should hire better lawyers.
Of course they can argue it, that's what is happening. They are going to sue the government. Why? Because the SEC refuses to even have a conversation about things. They've been trying, for years, to do so. This isn't some random small company, this is a public company that the SEC should be supporting with better answers than just refusing to even meet.
Worse off, along this same thread, Gensler doesn't even have basic answers to questions that he was prepared for.
In any case, even if the SEC did give out legal advice, I don't believe it would form any type of legal precedent. Nothing stops the next administration from taking a different view.
If you're a large public company knowingly entering into a regulated industry where your activities are considered by everyone to be a "a bit of a legally grey area", then litigation is the entire ball game. Do the thing, wait to get prosecuted, hope you win.
Alternatively, do some lobbying, get the law changed how you want, then do the activity. Been happening for centuries. Easy as pie.
According to their own site, they aren't that at all.
https://www.investor.gov/introduction-investing/investing-ba...
The U. S. Securities and Exchange Commission (SEC) has a three-part mission: Protect investors. Maintain fair, orderly, and efficient markets. Facilitate capital formation.
The main purposes of these laws can be reduced to two common-sense notions:
Companies offering securities for sale to the public must tell the truth about their business, the securities they are selling, and the risks involved in investing in those securities.
Those who sell and trade securities – brokers, dealers, and exchanges – must treat investors fairly and honestly.
All of this is moot anyway. We know the SEC is bringing a case against coinbase. If that case lists ETH, then we know that the SEC thinks it's a security! Congressional testimony is a weird thing to obsess about, but each to their own.
wait, what? something something about a government official paid by the people of the US...
They are selling unregistered securities.
They can argue that they are not selling securities, but that's what the wells notices is for. Things are playing out exactly as they should.
The fact that they are misleading the uninformed public is what I have a problem with, most people have no idea what the SEC does or how it works so this all seems foreign to them when it's actually perfectly normal.
Comply by not operating at all probably. Just the SEC can't outright say that.
Are you saying that because they said coinbase could list that means that crypto is compliant?
Heck half of the court system from Appellate to the Supreme court is to figure out what is and isn’t legal. Most government agencies won’t tell you if something is legal or illegal because they don’t know unless there clear case law on the subject, in which case your attorney should know, and they’d spend all day guessing.
If Coinbase wants clarity then take it to court and run it up the flagpole.
Show me a country where the government tells whether or not you're breaking the law without actually prosecuting you.
He definitely has, or at least he should have. When ETH switched to PoS things changed, but he hasn't officially updated his opinion on it and wasn't willing to go on record about it at this latest hearing.
https://coingeek.com/is-eth-a-security-if-it-wasnt-before-it...
Although, oddly, he's never done a crypto transaction.
He's probably really good at doing standard SEC things, but I'm really starting to question his role in the cryptodigital economy.
As Matt Levine wrote on his newsletter, saying that the SEC must have traded crypto to regulate it is like saying the DEA should have used meth to regulate meth -- if you think the thing is bad, then obviously you should understand it, then ban it, without using it yourself.
Now, people can disagree whether the thing is bad, but it would be foolish to assume that the SEC doesn't know how cryptocurrency works. If you look at the career paths and previous work of most of the top bureaucrats at the SEC, you'll see that they were usually involved in a great deal of legislation or had prominent positions in industry doing real projects.
Have you ever met a botanist who's never touched a plant?
Everyone has money. Not everyone has cancer.
Anyone who takes cancer drugs, is doing research. There is no "cure" for cancer (yet).
A better analogy might be: would you think it strange that someone teaching a C programming class has never compiled a program?
would you think it is strange that someone who's teaching a C programming class that has never used a computer?
'Imagine someone trying to bring a injunction against Liberty Reserve without owning any any stock in the company or having ever used their products'.
I am being entirely serious when I say that I trust a meth addict more than I do the DEA to create or impose any sort of regulation.
That said, the overall conversation about whether ETH is a security, or not, has been going on with Gensler, for years.
That's literally the opposite of what I just said.
Commodities aren't Gensler's job. It would be like someone asking him about the tax code. It's fair for him to say "I don't know." What he knows are securities.
No seriously, I can't answer that either.