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(Kitco News) U.S. lawmakers have tried to find out the truth about Securities and Exchange Commission (SEC) Chairman Gary Gensler’s definition of how bitcoin differs from other cryptocurrencies.
During his testimony before the U.S. Senate Banking Committee on Thursday, Gensler faced some penetrating questions about why Bitcoin is not a security, with some lawmakers focusing on the decentralization aspect. Gensler’s aggressive stance on cryptocurrency oversight excludes the world’s largest cryptocurrencies.
The SEC has previously cited the Howey test to determine whether cryptographic tokens are secure.
This test cites a US Supreme Court case to determine whether a transaction constitutes an investment contract, so it should be considered a security commonly used for cryptocurrencies. Under it, an investment contract is an investment of money by an entrepreneur in a common enterprise in hopes of benefiting from the efforts of others.
In the past, Gensler has said Bitcoin is not a security, while other SEC members are quoted as saying that Ethereum is also not a security.
To better understand Gensler’s still ill-defined thinking, lawmakers such as Pennsylvania Senator Pat Toomey focused on defining “joint venture.”
“Is centralization necessary to form a common enterprise?” Toomey asked Gensler. Gensler replied: [is when] You are dependent on a group of individuals.
Bitcoin is different in that “there is no group of individuals in the middle.”
Gensler avoided using the terms centralized/decentralized. The SEC looks for common companies that could be developers that people are betting on and relying on. “Even if the token is on 1,000 computers, [more] It’s about the middle group of developers,” explains Gensler.
Regarding broader cryptocurrency regulation, Gensler noted that the SEC’s goals would be undermined if the United States ended up with multiple federal agencies defining what security is.
Of the nearly 10,000 tokens in the cryptocurrency market, we believe the majority are securities. Offerings and sales of these thousands of cryptocurrency security tokens are covered by securities law, and these transactions are must be registered or made in accordance with the available exemptions, Gensler testified. Given that most crypto tokens are securities, many crypto intermediaries, whether they call themselves centralized or decentralized (e.g. DeFi), engage in securities trading. and must be registered with the SEC to some extent.
Disclaimer: The views expressed in this article are those of the author and may not reflect the views of the author Kikko Metals Co., Ltd. The author has made every effort to ensure the accuracy of the information provided. However, neither Kitco Metals Inc. nor the authors can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation of an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the authors of this article accept no liability for loss and/or damage resulting from the use of this publication.
