Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), has called for regulation of cryptocurrency advertising to protect investors from fraud.
Gary Gensler, in his interview on CNBC’s Squawk Box, did not answer the question of whether ETH is a security. However, he noted, “if you raise money from investors and they expect a profit based on the efforts of your project, it is within the scope of the securities law.”
“We do not participate in this kind of public discussion of a particular project and do not give legal advice in this way,” he answered the question of whether ether is a security.
Under US law, an asset meets the definition of a security if it is an investment in a traditional company and is expected to generate returns based on the efforts of that business. In this case, the asset has all the characteristics of a security, since it is an analogue of a stock or bond that has a monetary value.
Gensler added that cryptocurrency projects, while promoting their products, do not often share information with investors that affects the decision whether to invest in a project. The question, then, is whether such advertisements comply with US securities law?
The SEC chairman said that basic regulation needs to be put in place to protect investors from “lies and fraud” and that if the public expects a return on investment, it must receive all the proper legal information.
Earlier, the Commission was accused of a bias towards specific projects. So, the SEC said that bitcoin is not a security. At the same time, other cryptocurrencies, such as XRP, are considered by the Commission as a security. The SEC filed a lawsuit against Ripple in late 2020. The agency claims that the company sold $ 1.3 billion in unregistered securities in 2013.
Last year, Ripple CEO Brad Garlinghouse said that if it weren’t for the SEC litigation, XRP coin would still have the second largest market capitalization. In October, SEC Commissioner Hester Peirce again criticized the agency for its “anti-crypto” stance.
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