Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), insists that proof-of-stake tokens can meet the security definition under the Howey Test and thus fall under his agency’s regulatory authority.
Gary Gensler Says Proof of Stake Cryptocurrencies Are Securities
Among the cryptocurrencies using the proof-of-stake mechanism Ethereum, BNB, Cardano, Polkadot, Avalanche, Cosmos, Aptos, Mina, ROSE like dozens altcoin exists.
Speaking to reporters following Wednesday’s commission vote, Gensler said securities laws could be triggered as investors expect a return when they purchase tokens backed by a proof-of-stake consensus mechanism.
Gensler said:
“Whatever they advertise, put into a protocol, and lock their token on that protocol, is usually developed by a small group of entrepreneurs and developers. I suggest they try to accommodate all of these token operators, as well as intermediaries.”
Gensler’s comments came after journalists asked him his thoughts on the comments made by Rostin Behnam, Chairman of the Commodity Futures Trading Commission (CFTC), last week, arguing that ETH is a commodity and should be regulated by his institution.
In September 2022, after the Ethereum blockchain was upgraded to proof-of-stake known as Merge, Gensler suggested that proof-of-stake tokens could be investment contracts governed by securities laws.
Last week, Gensler’s argument that proof-of-stake tokens are securities received unexpected support through a lawsuit filed by the New York Attorney General’s (NYAG) against crypto exchange KuCoin.
*Not investment advice.
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