SEC Chairman Gary Gensler questioned on Ether’s classification as a security or commodity, highlighting market uncertainty and the need for regulatory clarity.

In a recent congressional hearing on oversight of the Securities and Exchange Commission (SEC), Chairman Gary Gensler was confronted by Representative Patrick McHenry about the classification of Ether, the second-largest cryptocurrency by market cap, which powers the Ethereum blockchain. The discussion emphasized the ongoing uncertainty surrounding the digital asset and the urgent need for regulatory clarity.

In 2018, then SEC Corporation Finance Director Bill Hinman stated that Ether was not considered a security. Last month, however, CFTC Chairman Rostin Benham expressed his view that Ether is a commodity. Adding to the confusion, the State Attorney General of New York asserted in a court filing that Ether is, in fact, a security. This lack of consensus among regulatory bodies has left the market uncertain about Ether’s true classification.

During the hearing, Chairman Gensler acknowledged that a security cannot simultaneously be an included and excluded commodity. However, when asked to categorize Ether under existing laws, Gensler declined to provide a direct answer, stating that the decision would depend on the facts and circumstances.

Representative McHenry pressed Gensler on whether he thought it served the market for Ether to be viewed as both a commodity and a security by different regulatory bodies. Gensler responded by asserting that the law is clear, but McHenry countered that the market doesn’t see it that way, citing uncertainty in regulatory actions by both the SEC and the CFTC.

McHenry stressed that the intention of the committee is to fix this uncertainty and provide a sound legal basis for Ether and other cryptocurrencies. The exchange between Gensler and McHenry highlights the need for clear and consistent regulation in the cryptocurrency space to protect consumers, promote innovation, and ensure market stability.

As the cryptocurrency market continues to grow and evolve, it becomes increasingly important for regulatory bodies to work together to provide clarity and guidance to investors and businesses alike. The ongoing uncertainty surrounding Ether’s classification underscores this need and will likely continue to be a point of discussion among policymakers and market participants.