The cryptocurrency community has criticized Gary Gensler, the current chair of the Securities and Exchange Commission (SEC) and a former professor at the Massachusetts Institute of Technology (MIT), after a video from 2018 surfaced in which he stated that cryptocurrencies are comparable to commodities or cash and are not securities. This has led to criticism of Gensler from the cryptocurrency community. As a result of this, hypocrisy allegations have been leveled at Gensler since his present position seems to contradict his prior views.
Gensler explained initial coin offerings (ICOs) and the Howey test in the video, which was taken from a seminar entitled “Blockchain and Money” that took place during the Fall Semester of 2018 at the university. He made the observation that “three-quarters of the market are not ICOs or not what would be called securities,” and he identified the markets in the United States, Canada, and Taiwan as countries that adhere to criteria that are comparable to those of the Howey test. The next statement that he made was that “three-quarters of the market is non-securities, it’s just a commodity, cash, and crypto.”
Gensler briefly admitted that initial coin offerings (ICOs) may ignite a discussion over securities, but he ultimately came to the conclusion that “three-quarters of the market is not particularly relevant as a legal matter.” However, in his present capacity as chairman of the Securities and Exchange Commission (SEC), Gensler has adopted a more harsh attitude on cryptocurrencies, with the SEC starting a series of high-profile investigations against crypto businesses in recent months. Gensler’s stance on cryptocurrencies reflects the SEC’s increased scrutiny of the industry.
The crypto community reacted swiftly to Gensler’s apparent shift of viewpoint, and many members were keen to point it out. “Wow” was all that Coinbase CEO Brian Armstrong had to say in response to a message that was published by cryptocurrency researcher “zk-SHARK.” In a tweet sent at his 658,900 followers, Erik Voorhees, the inventor of the cryptocurrency trading website ShapeShift, inquired as to when someone will be imprisoned for fraud. Farokh Sarmad, the inventor of the Web3 podcast Rug Radio, referred to Gensler as “disgusting” in a tweet that he sent out to his 346,200 followers, and a systems engineer who went by the handle “JD” demanded that Gensler provide an explanation for his shift in position.
On the other hand, not all members of the cryptocurrency community were on board with these comments. U.S. attorney Preston Byrne claimed that Gensler’s opinions as a professor should not be used against him in his present function as a law enforcement, since Gensler works in a different capacity than he did when he was a professor.
The continuous regulatory ambiguity that surrounds the cryptocurrency business is brought to light by the controversy over Gensler’s position on cryptocurrencies. As the Securities and Exchange Commission (SEC) and other regulatory authorities continue to probe crypto firms, many participants in the industry are advocating for clearer standards and laws to assist enable the growth and development of the sector.
