SEC’s Gensler analogizes crypto vs. securities to calling a dog a goldfish; sparks community backlash

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler, in a video tweet on April 27, used the dog-and-goldfish analogy to explain the importance of complying with security laws, before discussing cryptocurrencies. It faced backlash from the community.

By his analogy, Gensler Said It’s not like a cryptocurrency platform offers an “investment contract” to walk a dog off-leash and call it a goldfish to avoid legal issues.

Security laws are essential to investor protection, he said, adding that “the cryptocurrency market suffers from a lack of regulatory compliance, not a lack of regulatory clarity.”

“Many crypto platforms are just pretending that these investment contracts they offer are more like Goldfish The lack of compliance by these crypto platforms means a lack of basic investor protection. ”

He further pointed out that many cryptocurrency platforms bundle the activities of exchanges, broker-dealers and clearinghouses all in one, putting investors at risk if they do not register these functions.

It doesn’t matter if it’s onshore or offshore. If you offer securities to US investors, you must comply with US law. The law is clear. If you are a stock exchange, clearing house or broker-dealer, you must comply, register with us, address conflicts of interest and disclose material information.

Gensler’s analogy may have been intended to briefly explain securities law, but it met with a quick backlash from the crypto community.

Crypto community backlash

Critics in the tweet’s comments criticized Gensler for not providing guidance on what is considered a security, that he is corrupt, and also highlight Gensler’s lack of answers on whether Ethereum (ETH) is a security.

Twitter user @sirspacesape commented In a tweet, he posted a response video showing Gensler in 2018, revealing Gensler’s conflicting views on crypto at the time.

In a 2018 video, Gensler said, “Three-quarters of the market is non-securities. It’s just a commodity. Cash crypto.”

Another Twitter user, @MsCryptomum1, murmured “You?” — referring to another clip from Gensler’s 2018 lecture, he says:

“In terms of market value, probably three-quarters of this space has already been determined by the Securities and Exchange Commission to be non-securities. Bitcoin at 54%, Ether at about 15 points or something.”

Gensler himself teaches a course in blockchain technology at MIT and has a history of supporting cryptocurrencies, previously voicing his belief that cryptocurrencies could be a “catalyst for change” in the financial industry. had expressed.

Coinbase Seeks to Force SEC for Regulatory Clarification

Coinbase CEO Brian Armstrong recently criticized U.S. crypto regulation after trying to reach out to the SEC to discuss regulatory clarity, to no avail.

“The SEC is where we’ve really struggled over the past few years.”

Armstrong explained that Coinbase had been asking the SEC for a formal compliance rule for some time, but the feedback meeting was canceled the day before and a Wells Notice was issued to Coinbase the following week.

Coinbase then filed a lawsuit against the SEC to force the regulator to voice its decision on Coinbase’s 2022 petition.

The petition asked the SEC to use its rulemaking process to develop guidance for companies in the cryptocurrency industry.