Securities and Exchange Commission (SEC) Chair Gary Gensler told the House Appropriations Committee on May 18 that Bitcoin could potentially be a commodity token.
His exact words were:
“Bitcoin — maybe that’s a commodity token. That has a big market value, but that goes over there.”
Previously, Gensler had argued that most cryptocurrencies fall under the classification of a security. However, his stance is now clarified on the matter, which raises the question of how classifying cryptocurrencies as a commodity will affect Bitcoin and the overall crypto industry.
The SEC is in a lose-lose position
The U.S. crypto industry has long been marred by vague regulation, particularly regarding securities law.
The issue is exemplified by the ongoing SEC vs. Ripple lawsuit in which the regulator alleged Ripple had sold unregulated securities, in its XRP token, to the tune of $1.3 billion.
Ripple maintained that it had followed the law per its understanding of the rules. However, muddied waters have led to uncertainty on what the rules are.
In 2021, Ripple CEO Brad Garlinghouse summed up the situation by blasting the SEC’s arbitrary approach to regulation. Commenting on the former SEC Director William Hinman backtracking on Ethereum’s non-securities status, Garlinghouse asked, “how is the market supposed to have clarity?!”
In 2018 Bill Hinman said ETH isn’t a security and Jay Clayton agreed. But just weeks ago, Hinman filed a sworn affidavit in Court saying the SEC still has “not taken any position or expressed a view” on ETH’s status…so how is the market supposed to have clarity?! https://t.co/FRAlsfcLoG
— Brad Garlinghouse (@bgarlinghouse) August 4, 2021
Klaros Group Partner Jonah Crane said the Ripple lawsuit is a “high risk case” for them. The court ruling could force the SEC to define its policies more clearly. At the same time, this would leave no doubt about what…
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