SEC head admitted to recognizing cryptocurrencies on PoS as securities
Stacking cryptocurrencies can pass the Howey test, which is used to determine the status of securities. This was announced by SEC head Gary Gensler as part of a speech to the U.S. Senate.
The hearing came after the activation of The Merge update on the Ethereum core network.
“That’s another criterion of the Howey test – the public expects profits based on the efforts of others. If an intermediary offers steaming services to customers, it’s very much […] like lending,” the official said.
Gensler explained that he was not referring to any specific cryptocurrency.
During the hearing, Senator Pat Toomey criticized Gensler for thinking that almost all traded cryptocurrencies are likely unregistered securities. He also expressed dissatisfaction with the SEC’s role in determining rules for digital assets.
“The problem is that the Commission doesn’t share with us the evaluation system it uses,” the legislator explained.
According to Toomey, Congress may need to step in and outline a clear framework for investors and entrepreneurs. In turn, the SEC should provide “a lot more clarity.” It could prevent the collapses of firms like Celsius Network and Voyager Digital.
In response, Gensler parried that many companies should start interacting with the SEC. It is important for the industry to have a “cop on duty,” he added.
Recall that the agency is investigating every bitcoin exchange in the U.S., including Coinbase, according to Forbes.
Earlier, Gensler said he was developing ways to register digital assets as investment contracts and increasing efforts to authorize cryptocurrency platforms. In May, the official warned of possible prosecution of unregistered bitcoin exchanges.
In July, a group of senators introduced the Digital Consumer Protection Act. It requires firms that offer digital asset trading to register with the CFTC.
Later, the regulator announced the creation of the Office of Technology Innovation to regulate the industry.