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Is ETH a security? SEC Chair Gensler’s skeptical state could be the answer…

2min Read

The nature of Ether was questioned once again, however, this time around, the individual being questioned was none other than the US SEC chairman Gary Gensler.

US SEC Chair refuses to directly answer whether Ethereum (ETH) is a security

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  • Congressman Patrick McHenry questioned SEC Chairman about the nature of Ethereum¬†
  • McHenry also asserted that there was a lack of clarity surrounding cryptocurrencies in the market

Ethereum [ETH] – the second largest cryptocurrency by market cap – is back in the headlines for its nature. The question of whether or not Ether is a security was once again raised.

This time around, the one questioning Ether’s status was Patrick McHenry – the chair of the United States House Financial Services Committee. The question, notably, was directed toward the chairman of the U.S Securities and Exchanges Commission (SEC) – Gary Gensler.

Bringing up Ether’s status, McHenry initially probed whether an asset could be both a commodity and a security. Prior to this, the congressman highlighted former SEC Finance Director – Bill Hinman’s remarks on Ether not being a security, and the same backed by CFTC chair – Rosten Behnam who claimed that the coin was a commodity.

However, this was challenged by the attorney general of New York (NYAG) Letitia James. The attorney general claimed that Ether was, in fact, a security based on the Howey Test.

The NYAG made the claim in its lawsuit against Kucoin – a notable crypto exchange in the market. Attorney General James claimed that Ether, along with LUNA and UST, fulfilled the four criteria of the Howey Test. And, given that these coins were available for purchase, Kucoin had violated the Martin Act, as per the NYAG.

Replying to the congressman, Gensler stated that the Commodities Act defined securities as excluded commodities. He further asserted that an asset cannot indeed be an included commodity and an excluded commodity.

SEC Chair refuses to take a stance on Ether’s nature

Following this, McHenry asked how Gensler would deem Ether’s status, whether it was a commodity or a security. Moreover, the congressman was constantly talking over the SEC chair who was trying to not answer the question directly. Gensler expressed that he did not want to pre-judge Ether’s status, adding that it depended on the legal facts.

The SEC chair also claimed that, according to him, if the public anticipated profits on an asset based on the efforts of a group of individuals, then those assets were a security. Furthermore, speaking about whether or not there was a lack of clarity in the marketplace, Gensler claimed that there was clarity and that the “law is clear”. To which he was met with a rebuttal from the congressman, who said,

“The market doesn’t see this. Your regulatory actions and the CFTC’s regulatory actions say that there is a great deal of uncertainty here. It is the intention of this committee to fix that uncertainty and actually provide a sound legal basis”


Priya is a freelance cryptocurrency writer at AMBCrypto. A student in business administration, Priya focuses on the latest developments in the cryptocurrency and blockchain technology space.
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