In a recent statement, Gary Gensler, the Chairman of the US Securities and Exchange Commission (SEC), emphasized that cryptocurrencies should be classified as investment contracts and hence, platforms offering them must register accordingly.
Gensler tweeted that any platform offering investment contracts must abide by the securities laws and that many cryptocurrency platforms falsely claim that their investment contracts are not securities.
He explained that an investment contract is created when individuals invest money into an enterprise with a reasonable expectation of profits through the efforts of others.
Gensler further added that the lack of regulatory compliance in the cryptocurrency markets is a significant issue, and the law clearly states that any securities exchange, clearinghouse, broker, or dealer must register with the SEC.
Interestingly, there has been a debate within the cryptocurrency community about a video from 2018 in which Gensler claimed that three-quarters of the cryptocurrency market is not securities.
Before becoming the Chairman of the SEC, Gensler was a professor at the Massachusetts Institute of Technology (MIT).
However, Gensler has recently expressed concerns about the advancement of cryptocurrencies and hinted that Ethereum could face more regulatory scrutiny.
He stated that the primary function of the SEC is to ensure that companies and users of cryptocurrencies comply with securities laws.
Gensler emphasized that if owners of any cryptocurrency expect to profit based on the efforts of another company, it is a clear indication that the cryptocurrency is a security.