US SEC Chairman: “Most crypto tokens” are securities

On Monday (April 4), Gary Hensler, chairman of the U.S. Securities and Exchange Commission (SEC), expressed his concern for cryptocurrencies during a keynote address at the annual conference of the Penn Law Capital Markets Association of the University of Pennsylvania Kerry. Law school.

Hensler was nominated by President Joe Biden to chair the U.S. SEC on February 3, 2021, approved by the U.S. Senate on April 14, 2021, and sworn in on April 17, 2021.

According to his SEC biography, “before joining the SEC, Gensler was a professor of global economics and management practice at the MIT Sloan School of Management, co-director of MIT. [email protected]and senior advisor to the MIT Media Lab Digital Currency Initiative. ” From 2017 to 2019, he “served as chairman of the Maryland Consumer Protection Commission”.

Gensler was “formerly chairman of the U.S. Commodity Futures Commission, which spearheaded the Obama administration’s reform of the $ 400 trillion swap market.” He was also “Senior Adviser to U.S. Senator Paul Sarbanes on the writing of the Sarbanes-Oxley Act (2002), and was Deputy Secretary of the Treasury and Assistant Secretary of the Treasury in 1997-2001.”

Hensler “received a bachelor’s degree in economics in 1978 and an MBA from Wharton School, University of Pennsylvania, in 1979.”

He began his keynote speech by saying that he was “invited to talk about cryptocurrencies for about $ 2 trillion” and that in that speech he would “simply express his own views and” not speak on behalf of the Commission or SEC staff. ” Gensler believes that “there is no reason to view cryptocurrencies differently just because different technologies are used”, and much of his speech focused on explaining what the SEC does to fulfill its responsibilities in three areas: “platforms, stablecoins and cryptocurrencies”. .


Here, Gensler refers to “platforms for crypto-trading and lending, whether they call themselves centralized or decentralized (DeFi).”

Gensler is not happy that most of the tokens traded on these (unregistered) platforms are likely to be securities

«… these platforms are probably trading securities. A regular trading platform has at least dozens of tokens on it. In fact, many have well over 100 tokens. As I will say later, many tokens traded on these platforms may well fit the definition of “securities”. While the legal status of each token depends on its own facts and circumstances, given the Commission’s experience with different tokens that are securities and with a large amount of token trading, the likelihood that any platform has no securities is very small .«

He therefore asked SEC staff to work on the following projects related to the platform:

  • «… Registration and regulation of the platforms themselves is similar to an exchange.«
  • given “how best to register and regulate platforms where securities and non-securities trading are intertwined«
  • defining “whether it would be appropriate to separate custody«
  • given “whether it would be appropriate to separate the functions of market creation«


The SEC chairman says that “outside of use on crypto platforms, stablecoins are not normally used for commerce.” They are “not issued by the central government and are not legal tender.” However, they “raise three important sets of policy issues”, “offering functions similar to and potentially competing with bank deposits and money market funds”.

These three problems are as follows:

  • «First, stablecoins raise public policy views on financial stability and monetary policy.«
  • «Second, stablecoins raise questions about how they could potentially be used for illegal activities.«
  • «Third, stablecoins cause problems to protect investors.«

(Non-stablecoins) Crypto tokens

Gensler believes most of these crypto tokens are securities according to a Howie test in the 1946 U.S. Supreme Court, which states that “an investment contract exists when there is investment of money in a joint venture with a reasonable expectation of profit that will be derived from the efforts of others ”.

«The fact is that most crypto-tokens involve a group of entrepreneurs who collect money from the public in anticipation of profit – a hallmark of an investment contract or a security under our jurisdiction. Some are probably just some, similar to digital gold; they may not be securities. Even less, if any, act like money.«

According to him, now “many entrepreneurs raise money from the public by selling crypto-tokens, with the expectation that managers will build an ecosystem where the token will be useful and which will attract more users to the project,” which means it’s important. to have the SEC work to obtain these “crypto tokens, which are securities to be registered with the SEC”.

In conclusion, the SEC chairman said:

«We already have reliable ways to protect investors who trade on platforms. And we have reliable ways to protect investors if entrepreneurs want to raise money from the public.

«We must apply the same protections in cryptocurrencies. Let’s not risk undermining 90 years of securities law and creating some kind of regulatory arbitrage or loophole.«


The opinions and opinions expressed by the author or any of the people mentioned in this article are for informational purposes only and are not financial, investment or other advice. Investing in cryptocurrencies or trading is associated with the risk of financial loss.

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