SEC Chair Gary Gensler on CNBC

SEC Chair Gary Gensler Discusses Ripple Regulation

January 12, 2022 5:19 pm Comments

SEC Chair Gary Gensler appeared on CNBC Monday to discuss cryptocurrency regulation in 2022 and the allegations against Ripple.

On December 22, 2020, the SEC filed a lawsuit against Ripple as well as two of its executives. The SEC is alleging they traded $1.3 billion in their cryptocurrency XRP as a security without first registering it with the SEC. Ripple and other parties have since countered with claims that the SEC is biased in its assessment and that no fair notice was given prior to the complaint being filed.

The clip shown here begins with Gensler being asked:

“Can you explain your view of whether Ethereum is a security or not—I think you’ve actually suggested it isn’t, but then while you believe that Ripple is a security, and I know there’s an ongoing lawsuit related to Ripple, but could you speak to the Ethereum issue?” Sorkin asked.

“Refer back to my earlier question. I’m not going to speak to any one matter,” Gensler responded. He continued saying that the SEC doesn’t “get involved in public forums talking about any one project or one possible circumstance.”

Gensler continued with the same argument presented in the SEC filings “If you are raising money from the public, and the public is in anticipation of profit based upon that promoter, sponsor, that group’s efforts — that’s within the securities laws, and it’s within the securities laws because Congress painted with a broad brush.”

However, the previous SEC Chairman has stated that Ethereum was not a security during his tenure at the helm of the SEC. The change in posture is a critical piece of the Ripple defense alleging other similar tokens get a “free pass”.


Gensler went on to say that investments that call themselves a token “are still probably, possibly a security.”


According to

He was also asked to comment about the increase in crowdfunding using cryptocurrencies. Reiterating that he will not comment on any particular project, the chairman detailed: “Crypto tokens, I will call them, are raising money from the public, and are they sharing with the public the same set of disclosures that helps the public decide and are they complying with our Truth in Advertising? Call it the Securities Act’s anti-fraud provisions.”

“There are thousands of these projects basically trying to raise money from the public so that they can back an entrepreneurial idea,” the SEC chairman described. While emphasizing that he supports innovation, Gensler noted that “it’s about bringing it into the securities laws.” He opined:

Unfortunately, way too many of these are trying to say: ‘Well, we are not a security. We are just something else.’

“I think that the facts and circumstances suggest they are investment contracts, they are securities, and they should register,” Gensler concluded.


In addition, he was further pushed on whether Ethereim is a security.


Cryptopotato reports:

Gensler not answering the question on Ethereum’s regulatory status highlights the significance of the issue. As an MIT professor in 2018, he had noted that Ether should be considered as security since it saw the light of day through an ICO.

“I think Ether when it was done in 2014, would pass this [Howey] test. When I say ‘pass,’ it means it’s a security,” he said around that time.

Failing to confirm his earlier stand on the world’s second-largest digital currency is not the only thing amiss in this situation. Gensler’s reply could have brought substantial clarity on whether it has a uniform view on crypto assets.


Gensler’s lack of clarity is typical when dealing with interviews regarding ongoing investigations, so while some are reading into the interview as the SEC being on shaky ground. It should be noted that giving in-depth information on such a case can be considered hinting at the SEC’s strategy and that there is no reason to believe through this interview alone that there is trouble with the case.

There is a possibility this could also be a hint that other assets built on Ethereum could later be subject to regulatory action. 

The SEC’s policy on tokes and whether or not they are a security is ever-evolving. In December of 2020, the SEC changed the classification of Bitcoin-focused Stacks from a security token to a non-security token.

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