SEC chair Gensler reaffirms Bitcoin’s commodity status, criticizes industry’s disregard of rules

US Securities and Exchange Commission (SEC) Chair Gary Gensler reiterated that Bitcoin is not classified as a security, providing a critical clarification amid ongoing regulatory scrutiny of the cryptocurrency industry.

Speaking in an interview on CNBC’s Squawk Box on Sept. 26, Gensler reinforced the SEC’s position that Bitcoin remains a commodity under US law. He said:

“As it relates to Bitcoin, my predecessor and I have said that’s not a security.”

The statement follows the SEC’s approval of several spot Bitcoin exchange-traded funds (ETFs), allowing the digital asset to be traded on prominent US exchanges, including the Nasdaq.

Disregard for regulations

While Bitcoin’s regulatory status is clear, Gensler criticized the broader crypto industry for its widespread disregard for existing regulations. He accused many market participants of ignoring rules and seeking exemptions from compliance.

According to Gensler:

“There are rules in place, but many have chosen to ignore them.”

He added that this non-compliance has contributed to instability and confusion within the market.

In contrast, Ethereum, the second-largest crypto, has faced a more ambiguous regulatory environment. The SEC has yet to 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 but simultaneously initiated investigations into companies associated with the Ethereum ecosystem, such as Consensys and Uniswap.

Lawmakers’ concerns

Gensler’s approach to regulating Ethereum has drawn criticism from members of Congress. US policymakers, particularly in the House of Representatives, have accused Gensler of creating confusion by coining terms like “crypto asset security” in legal actions.

During a recent congressional hearing, lawmakers expressed frustration over the SEC’s handling of crypto regulations, with some arguing that the agency has stifled innovation. Other SEC Commissioners, like Hester Peirce and Mark Uyeda, endorsed the criticisms, saying the regulator has failed to provide clarity despite having the tools to do so.

Despite the criticism, Gensler maintained that the future of the crypto industry depends on stronger regulatory frameworks to protect investors and build trust.

The SEC chair stated:

“This field will not long persist if you can’t build that investor trust in the markets.”

Gensler compared the evolution of cryptocurrencies to the development of other industries, noting that regulations, like “traffic lights and stop signs,” are essential for progress.

The SEC’s clear stance on Bitcoin contrasts with its ongoing scrutiny of other digital assets, leaving the regulatory future of the broader crypto market uncertain.

Mentioned in this article