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HomeCrypto NewsMarketSenator Toomey Bashes SEC Chairman For Considering Most Cryptos Security

Senator Toomey Bashes SEC Chairman For Considering Most Cryptos Security

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Sen.Toomey Pushes Back on Sec’s Chairman’s Statement.


According to Gary Gensler, Chairman of the Securities and Exchange Commission, nearly all crypto tokens fit the definition of traditional security and should be registered and regulated as such. He made his case to skeptical members of the Senate Banking Committee, who pushed him for more information on his opinion that while Bitcoin functions similarly to a commodity, most tokens are comparable to standard stocks.

Pat Toomey (Penn.), the top Republican on the panel, argued that crypto tokens have differentiating factors that should be considered when developing a regulatory framework. Namely, tokens have varying degrees of decentralization, they do not have a financial claim on the issuer, and they can typically be settled in real-time without intermediaries.

Gensler said that the Supreme Court has already ruled on what defines security and that there is a well-known test with many factors used to determine if most tokens are securities.

“There are many factors,” he said, responding to Toomey’s questioning. “It’s not one spectrum of decentralization versus decentralization.”

Gensler insisted that many tokens share the format of a start-up business, with a few entrepreneurs promoting investment in their project to a larger group of investors who buy a stake in the enterprise in hopes of making a profit.

According to this logic, the technology and logistics of crypto kept on a distributed ledger are irrelevant to the question of how it should be governed.

“What I think about are the people in the middle,” Gensler said. “The developer is stuck in the middle, and investors are gambling on them–even if the token might be found on a thousand computers.” He continued, saying that this isn’t what Supreme Court justices care about. “It’s not whether or not the token is on a thousand computers. They’re looking at something else entirely.”

This explanation was unsatisfactory for Toomey and other crypto critics in the Senate.

“It is not practical to fail to define precisely where on this scale you have a big enough shared enterprise that it classifies as a security and where you don’t,” he said. “You’ve said Bitcoin doesn’t. Your colleagues say Ethereum doesn’t, but a diligent developer who wants to obey this don’t know where that line is drawn.”

Some analysts believe Gensler also revealed his stance on Ethereum and puts ETH in security.

Fox Journalist Terret writes: “Did Gary Gensler indirectly reveal his stance on Ethereum at today’s BankingGOP hearing? “A common enterprise, a group of individuals in the middle…that developer is in the middle and the investing public is betting on them, counting on them even if the token might be on a thousand computers. It’s the group of developers in the middle.”

Ethereum’s merge was pulled off by a group of core developers that (arguably) the public was counting on to execute and get right. Does that make it a common enterprise, thus security in Gensler’s eyes?”

This explanation was unsatisfactory for Toomey and other crypto critics in the Senate.

Ripple General Counsel also questioned the SEC Chairman’s Interpretation of the Supreme Court’s Security Test.

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Nellius Irene
Nellius Irene
Nellius Irene is a crypto-journalist who has been following the industry since its early days. She has a keen interest in all things blockchain and believes it will revolutionize how we interact with the world around us. Nellius is passionate about informing her readers of the latest news and developments in the world of cryptocurrency and is committed to providing accurate, timely information.

Disclaimer: The content is for informational purposes only, may include the author's personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

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