SEC’s Gensler analogizes crypto vs. securities to calling a dog a goldfish; sparks community backlash

The U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has faced backlash from the crypto community after using a dog-goldfish analogy to explain the importance of compliance with security laws in a video tweet on April 27.

In his analogy, Gensler said that crypto platforms were offering “investment contracts” and calling them anything but would be like walking a dog without a leash and calling it a goldfish to avoid legal issues.

He continued that security laws were essential for investor protection and that “crypto markets suffer from a lack of regulatory compliance; It’s not a lack of regulatory clarity.”

“Many crypto platforms are just pretending that these investment contracts that they offer are more like goldfish and the lack of compliance by these crypto platforms means that you don’t have basic investor protections.”

He further noted that many crypto platforms combine the activities of an exchange, a broker-dealer, and a clearing house all into one, and not registering these functions puts investors at risk.

It doesn’t matter if you call yourself onshore or offshore. If you make securities available to American investors, you must comply with American laws. The law is clear. If you’re a securities exchange, clearing house, broker-dealer, you must come into compliance, register with us and deal with conflicts of interest and disclose important information.

While Gensler’s analogy could have been intended to be a simple explanation of securities laws, it faced swift backlash from the crypto community.

Crypto Community backlash

Critics in the comments of the tweet slammed Gensler for not providing guidance on what is deemed a security, that he is corrupt, and also highlighting Gensler’s lack of answer on whether Ethereum (ETH) is a security.

Twitter user @sirspacesape commented on the tweet, posting a response video showing Gensler back in 2018 — revealing Gensler’s contradictory view on crypto at that time.

In the 2018…