SEC Chair Once Again Suggests that PoS Tokens May be Securities
- SEC Chair Gary Gensler has suggested that all the PoS crypto tokens may be considered securities.
- Gensler contradicted CFTC Chair Rostin Behnam’s statement from last week when he said that stablecoins and Ether (ETH) are not securities.
- “Notwithstanding a regulatory framework around stablecoins, they’re going to be commodities in my view,” said Behnam.
- Gensler claims that investors who stake their tokens expect some kind of profit from their investments, which confirms that PoS tokens are securities.
- The SEC Chair has suggested staking token operators “seek to come into compliance.”
The position of the Securities and Exchange Commission on cryptocurrencies remains clear, as the community is questioning SEC Chair Gary Gensler’s capabilities following the collapse of crypto exchange FTX and 130+ other companies, along with crypto bank Silvergate Bank. Interestingly, Gesnler suggested in a recent statement that proof-of-stake crypto tokens might be considered securities by the regulator.
The SEC Chair was questioned on March 15 after a commission meeting on cybersecurity issues, and as per a report from TheBlock, Gensler contradicted what Rostin Behnam, the Commodity Futures Trading Commission Chair, stated during a Senate Agricultural Committee meeting last week.
Behnam said that stablecoins and Ether (ETH), in his opinion, are commodities and cannot be classified as securities. “Notwithstanding a regulatory framework around stablecoins, they’re going to be commodities in my view,” said Behnam.
However, SEC Chair Gensler pointed out that “the investing public is investing anticipating a return, anticipating something on these tokens, whether they’re proof-of-stake tokens, where they’re also looking to get returns on those proof-of-stake tokens and getting 2%, 4%, 18% returns,” while adding:
“Whatever they’re promoting and putting into a protocol, and locking up their tokens in a protocol, a protocol that’s often a small group of entrepreneurs and developers are developing, I would just suggest that each of these token operators … seek to come into compliance, and the same with the intermediaries.”
It is clear that the SEC Chair believes that PoS tokens are securities, as investors expect a return from staking their assets. Last month, Gensler told a Senate Banking Committee that staking is “another indicia that, under the Howey test, the investing public is anticipating profits based on the efforts of others.”
On the other hand, the SEC has launched an aggressive campaign to flush out crypto operations from the US. The regulator recently issued a Wells Notice to Paxos, a payments company that was responsible for issuing the BUSD stablecoin, claiming that BUSD is an unregistered security.
Moreover, the SEC also sued crypto exchange Kraken for providing staking services to the citizens of the US and stated that the exchange failed “to register the offer and sale of their crypto asset staking-as-a-service program.” Kraken agreed to pay $30 million in disgorgement, prejudgment interest, and civil penalties.
In response to the regulator’s actions against Kraken, the largest crypto exchange in the US, Coinbase, said that the company’s staking services cannot be classified as securities by the Commission. Paul Grewal, the Chief Legal Officer at the exchange, said that staking is neither a security under the US Securities Act nor under the Howey test.