Gary Gensler: Confusing the Crypto Industry with Controversial Statements about Bitcoin
The SEC Chairman’s Impact on the Crypto Community
Gary Gensler, the chairman of the United States Securities and Exchange Commission (SEC), has gained notoriety within the crypto community. Now, the head of the crypto watchdog has made some statements about Bitcoin (BTC) that are causing quite a stir.
Gensler’s Controversial Statements
Gensler is the head of the American crypto watchdog, the SEC. This government agency has filed numerous lawsuits against various major companies, including Ripple Labs, the company behind XRP, which was sued by the SEC in December 2020.
Gensler’s Undefined Classification of Bitcoin
Gensler is known for making controversial and contradictory statements. During a recent testimony before the US Congress, the SEC chairman referred to Bitcoin as neither a security nor a commodity.
The Impact of Ripple’s Classification
Gensler’s refusal to define Bitcoin’s classification leaves the cryptocurrency unregulated and without proper oversight. Despite the decentralized nature of Bitcoin, this lack of regulation deters large companies from investing in it.
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Cryptocurrencies like Bitcoin and Ethereum are subjected to the “Howey test” to determine whether they are considered securities or not. Bitcoin, according to the Howey test, does not fall under this classification due to its decentralized nature.
If a cryptocurrency is classified as a security, the company behind it must register it with the SEC. Ripple did not register their token XRP, leading to their lawsuit in December 2020. The lawsuit lasted for almost three years, with a partial ruling in July 2023. Following the ruling, XRP’s price increased by 80%.