Gary Gensler Avoids Ethereum Classification Question
In a tense U.S. House Financial Services Committee hearing, SEC Chair Gary Gensler once again avoided confirming whether Ethereum (ETH) should be classified as a security or a commodity. The exchange between Gensler and Committee Chair Patrick McHenry highlighted the ongoing confusion surrounding U.S. crypto regulation.
McHenry referenced past statements from regulators and officials, including former SEC Director Bill Hinman, who said in 2018 that Ethereum was not a security. The CFTC has since classified Ethereum as a commodity, while New York’s attorney general recently argued in court that it is a security.
“Clearly, an asset cannot be both a commodity and a security,” McHenry said, pressing Gensler for a direct answer.
Gensler Declines to Commit
Despite repeated questioning, Gensler refused to take a firm stance, reiterating only that securities laws are “clear” and depend on “facts and circumstances.”
When McHenry asked for a simple classification, Gensler avoided specifics, claiming it would be inappropriate to “prejudge.” The SEC chair instead gave a broad explanation of how securities are defined, emphasizing the role of “a group of entrepreneurs raising money from the public.”
McHenry, visibly frustrated, responded: “You have taken 50 enforcement actions. We are finding out as we go, as you file suits, what you consider a security. I’m asking you a very simple question about the second-largest digital asset.”
Calls for Regulatory Clarity
The heated exchange underscored growing bipartisan frustration over the SEC’s “regulation by enforcement” approach. McHenry argued that conflicting stances between the SEC and CFTC have created market uncertainty, harming innovation and investor protection.
“The market doesn’t see clarity,” McHenry said. “Your regulatory actions and the CFTC’s regulatory reactions say that there’s a great deal of uncertainty here.”
Gensler maintained that “the law is clear,” rejecting the claim that ambiguity exists.
Meanwhile, other lawmakers, including Representative Warren Davidson, have proposed legislation to remove Gensler as SEC Chair, citing his “long series of abuses” and overreach in crypto enforcement.
Ongoing Uncertainty for Ethereum and Crypto Markets
The refusal to clearly define Ethereum’s legal status leaves investors and builders in a precarious position. The broader crypto industry continues to demand consistent guidance on how tokens are categorized and regulated in the United States.
As Congress moves toward drafting new legislation to address digital assets, the clash between regulatory agencies may shape the future of U.S. crypto policy for years to come.
