A new video has surfaced showing future Securities and Exchange Commission Chairman Gensler telling an audience of institutional investors that four cryptocurrencies are not securities, and that 75% of the overall crypto market at the time was outside that legal category.
The video is from a crypto-themed institutional investor event hosted by Bloomberg and Fidelity in 2018, and it shows Gensler expressing sentiments that appear to contradict his more recent suggestions that all cryptocurrencies other than Bitcoin are securities. You can watch the relevant excerpt above.
“Over 70% of the crypto market is Bitcoin, Ether, Litecoin, Bitcoin Cash. Why did I name those four? They’re not securities,” Gensler tells the audience. “Three quarters of this [digital asset] market are not securities.”
The remarks came at a time when crypto was in the midst of a bull market, and precede Gensler’s appointment as SEC chair by a little over two years. For the Bloomberg event, Gensler is identified as a senior MIT lecturer and a former chair of the Commodities Futures Trading Commission.
Other videos have surfaced from Gensler’s time at MIT that show him stating Ethereum is not a security. This video is arguably more significant since it shows the now-chair of the SEC providing guidance to hedge funds and other investors about the legal status of the crypto market.
Crypto lawyer Preston Byrne has previously noted that Gensler’s 2018 comments came in a personal capacity and not as a government official, and so are not material when it comes to the SEC’s current legal position. Nonetheless, the comments likely will anger the crypto industry and many cryptocurrency owners, who claim Gensler failed to provide guidance about the legality of specific tokens before embarking on what many have called a “regulation by enforcement strategy.”
The most recent phase of Gensler’s crackdown came last week when the SEC sued top crypto exchanges Binance and Coinbase for violating securities laws. In its legal complaints, the agency for the first time identified 13 cryptocurrencies—including major ones like Solana, Cardano, and Polygon—as securities for the first time.
While Gensler has recently refused to say that Ethereum is not a security, the SEC has so far been silent about the other non-Bitcoin currencies cited in the Bloomberg speech. One of them, Litecoin, is an early competitor to Bitcoin that launched in 2011, while Bitcoin Cash was a so-called fork of the original cryptocurrency that garnered flash-in-the-pan success upon launching in 2017 but has since declined in relevance.
Gensler’s comments about the four cryptocurrencies not being securities came as part of a much broader speech during which he described crypto market dynamics and warned that many recently launched blockchain projects were outright scams. The now-SEC chair was introduced at the event as “my friend Gary Gensler” by Mike Novogratz, a hedge fund billionaire who runs the crypto fund Galaxy.
In a separate portion of the video (shown here), Gensler appears to endorse crypto lending, comparing the practice to the more familiar one of lending shares.
“You’ve gotten comfortable with [stock lending] since someone else got comfortable with it decades in the past,” says Gensler. “But if you run a hedge fund and want to do what I’ll call crypto sec lending, how does that work? I think firms like Mike’s are going to figure this out.”
Gensler’s positions on crypto lending appears to have changed since his tenure at the SEC, where he has recently declared crypto lending to be illegal.
The SEC declined to comment on the record about any potential conflicts between Gensler’s 2018 remarks and the agency’s current legal stance.