SEC Chairman Gary Gensler’s contradictory statements on the classification of Ethereum have been the crux of the lawsuit brought against the regulatory body by blockchain software company Consensys.
The ETH Controversy: Commodity Or Security?
SEC Chairman Gary Gensler is again under fire because of his views on cryptocurrency, this time for claiming ETH as a security. He is accused of 'misleading Congress' on the crucial matter of Ethereum's classification as securities, a charge that could have far-reaching implications.
The US House Financial Services Committee, a respected authority in financial matters, has issued a statement accusing the SEC, under Gensler's leadership, of making contradictory statements about Ethereum's security status. Irked by these inconsistencies, the US Banking Committee has claimed to keep an eye on the SEC for its regulatory overreach across all digital assets.
Consensys’s Lawsuit Against SEC
It all went down during the Financial Committee hearing on the legal case between blockchain software company Consensys and the SEC. During the hearing, Congressman Patrick McHenry highlighted court filings that drew attention to Gensler’s contradictory statements regarding Ethereum’s classification as a security as opposed to prior views held by the regulatory agency.
He released a statement clarifying his opinions further,
“Just months after a federal judge sanctioned SEC enforcement lawyers for lying to the court, new evidence shows Chair Gensler himself misled Congress. In testimony to the Financial Services Committee last April, Chair Gensler refused to answer questions regarding the SEC's classification of Ether. New court filings show this was an intentional attempt to misrepresent the Commission's position.”
ETF Applications Lead to SEC’s ETH Troubles
The entire issue stems from the recent applications filed to the SEC for the country’s first-ever spot Ether exchange-traded funds (ETFs). In his statement, McHenry emphasized the distinctive clarity on whether ETH is a security or a commodity, claiming that it lays the groundwork for any further regulatory framework for the cryptocurrency. He also stated that the securities watchdog's constantly changing stance could significantly impact investors and companies.
McHenry wrote,
“Classifying Ether as a security contradicts previous statements of the SEC and Chair Gensler-yet another example of the arbitrary and capricious nature of the agency's regulation by enforcement approach to digital assets. This episode underscores the urgency of Congress passing the bipartisan FIT for the 21st Century Act to provide a clear regulatory framework and robust consumer protections for digital asset markets.”
House Republicans Against Gensler
The Congressman also claimed that the regulatory agency would not be favored by the Republicans in the committee, who would hold Gensler and the SEC accountable for its regulatory overreach. Furthermore, he claimed that under Gensler’s leadership, the SEC is stifling innovation in the country by not laying down a clear law of the land. He accused the SEC of leaving American consumers unprotected and of risking the national security of the country by not explicitly stating clear guidelines behind the status of cryptocurrencies like Ethereum.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
