Crypto community members are raising concerns over the apparent inconsistency in Gary Gensler’s views on cryptocurrencies. A video from a 2018 lecture has surfaced in which the current Securities and Exchange Commission (SEC) chair stated that cryptocurrencies are similar to commodities or cash and should not be considered securities. At the time, Gensler was a professor at the Massachusetts Institute of Technology (MIT), teaching a course titled “Blockchain and Money” during the Fall Semester.
Gensler’s statements on Initial Coin Offerings (ICOs)
In the video, Gensler discussed initial coin offerings (ICOs), stating that “three-quarters of the market are not ICOs or not what would be called securities.” He cited the United States, Canada, and Taiwan as jurisdictions that adhere to something resembling the Howey test.
Gensler then referred to cryptocurrencies as non-securities, equating them to commodities or cash. Although he briefly mentioned that ICOs might spark debate over securities classification, he concluded that “three-quarters of the market is not particularly relevant as a legal matter.”
Crypto community reacts to Gensler’s past statements
Gensler’s past remarks have left many in the crypto community taken aback. Coinbase CEO Brian Armstrong responded with a simple “Wow” to a Twitter post by cryptocurrency researcher “zk-SHARK.” Erik Voorhees, founder of crypto trading platform ShapeShift, questioned the potential consequences for fraud in a tweet to his 658,900 followers.
Farokh Sarmad, founder of Web3 podcast Rug Radio, labeled Gensler “disgusting” in a tweet, while a systems engineer named “JD” demanded an explanation for the change in opinion from the SEC Chair.
Some lawyers, like Preston Byrne, have argued that Gensler’s role as a professor and a law enforcer are different capacities, implying that his views may have evolved.
However, blockchain technology specialist Jonathan Schmalfeld countered this argument, asserting that Gensler’s interpretation of the Howey test should not change based on his position.
In response, Byrne clarified that there are three answers when discussing the topic with clients: what the law is, how enforcers will interpret it, and what the law should be. He emphasized that Gensler’s current position limits him to providing only one of those answers.