Appearing before the U.S. House Financial Services Committee on Wednesday, Securities and Exchange Commission (SEC) Chair Gary Gensler said that bitcoin (BTC) isn’t a security but stopped short of calling the digital asset a commodity.
The sentiment echoed Gensler’s previously more lenient stance on cryptocurrencies, which was revealed this summer in a leaked 2018 video in which the then-MIT professor said that bitcoin, ether, litecoin and bitcoin cash weren’t securities.
Pressed by committee chairman Patrick McHenry (R-NC) about his 2018 comments, Gensler said that bitcoin doesn’t pass the Howey Test, a set of four criteria an asset must meet to qualify as a security. He said other tests would determine how bitcoin was classified and did not call the asset a commodity.
Gensler has adopted a more aggressive stance toward cryptos since assuming his SEC position in 2021, repeatedly calling for the asset to be regulated as a security and for exchanges to be in compliance with security laws. In June, the SEC sued leading crypto exchanges Coinbase and Binance for allegedly operating as an unregistered securities exchange, broker and clearing agency and other charges.
On Wednesday, Gensler reiterated his concerns about the digital asset industry.
“[Crypto] is a field that’s rife with fraud and manipulation and scams, and the American public is still getting hurt by the non-compliance in the field,” Gensler said.
At the Piper Sandler Global Exchange & FinTech Conference in June, Gensler noted that “teams have” been “promoting” cryptocurrencies. “They are not growing out of the ground like corn or wheat,” he said, adding: “Regardless, however, of the ledger being used, be it a spreadsheet, a database, or blockchain technology, when investors put their money at risk, it’s the economic realities of the investment that matter.”
Following Bipartisan Letter
Gensler’s appearance came a day after a bipartisan group of House Financial Services Committee members sent a letter to Gensler concerning spot bitcoin exchange-traded funds ( ETFs), an SEC-contested way that investors could gain exposure to bitcoin without owning the asset directly.
The politicians wrote the letter “to ensure the [SEC] does not continue to discriminate against spot bitcoin [ETFs].”
The agency has an October deadline for making decisions on bitcoin spot ETF applications from several companies, including BlackRock, Bitwise, WisdomTree and VanEck. However, those October deadlines could face a major hurdle. U.S. government agencies are currently staring down a potential shutdown if Congress doesn’t pass 12 different spending bills before government funding expires at 12:01 a.m. on Oct.1.
Gensler told the committee that the SEC has around 5,000 employees and that 92 to 93 percent would be furloughed in the case of a shutdown, leaving behind a skeleton staff and essentially halting normal operations.