SEC Will Never Classify Bitcoin or Ethereum as Securities: Gary Gensler

Outgoing US Securities and Exchange Commission (SEC) Chairman Gary Gensler has maintained that the regulator does not classify Bitcoin and Ethereum as securities.

In addition, he distinguished the world's largest cryptocurrency by market value from other tokens by saying that they still need to prove their true value.

A clear difference to Bitcoin, Ethereum

Gensler made the comments during exit interviews with Yahoo Finance and CNBC's Squawk Box, where he reflected on his tenure, which will end as the Trump administration prepares to take office.

Speaking to Yahoo Finance's Jennifer Schoenberger, the head of the agency clarified that the SEC has never classified BTC and ETH as securities.

“My predecessors and I never thought Bitcoin was a security. We didn't say Ethereum is a security,” Gensler said.

Interestingly, his statements seem to contradict each other, especially regarding Ethereum. A filing from April 2024 indicated that the agency believed ETH was an unregistered security that had been trading in violation of relevant laws for at least a year.

However, there appears to be no ambiguity regarding Bitcoin, with Gensler reiterating the situation in his CNBC appearance, stating that BTC does not fall under securities laws, unlike the tens of thousands of other tokens in the market.

Asked why he didn't explain the ETH and BTC situation more clearly, Gensler said that his job required him to be very careful with his language.

While the Biden appointee described bitcoin as “highly speculative,” he acknowledged that it could become a gold-like asset in the future as it continues to grow in popularity globally.

However, he had no kind words for other cryptocurrencies, saying they needed to demonstrate their true use case and value proposition first.

“These thousands of projects have to show their use cases and have fundamentals on them or they won't last.”

Criticism of the SEC approach

One of the most controversial aspects of Gensler's term is the SEC's enforcement-heavy approach to crypto regulation. Critics have argued that the agency is focused on punishing non-compliance rather than providing clear rules for the industry.

Asked about this by CNBC's Andrew Sorkin, the commission's leader turned Congress over to a new regulatory framework. In addition, he criticized the high level of non-compliance by crypto projects, which he said fell under securities laws.

When asked by an appeals court to better explain why the SEC rejected Coinbase's request for the agency to develop crypto-specific rules, the former MIT professor said: “Not liking the law and not liking the rules doesn't mean there aren't rules and regulations.”