The lack of regulatory clarity in the crypto space over the course of the past few years has been highly frustrating for many investors.
Some investors want to get involved in the space but are waiting for the legal status of many parts of the industry to be clarified. Other investors are not ready to take such a big risk when there is no certainty about how funds should be held and what safeguards are in place (as with FTX).
Gensler announces that everything other than Bitcoin is a security
Gary Gensler has now provided some much-needed clarity to the industry by reiterating what he has been saying for well over a year now, that everything other than Bitcoin is a security and decentralised in name only (DINOs).
Gensler recognises that Bitcoin can be treated as a commodity, since the lack of governance means that any significant protocol changes are nigh on impossible (as demonstrated by the block size wars).
Hot off the @NYMag press, from @GaryGensler
“Everything other than bitcoin,” Gensler told me, “you can find a website, you can find a group of entrepreneurs, they might set up their legal entities in a tax haven offshore, they might have a foundation, they might lawyer it up to… https://t.co/3wNrnNLKmi pic.twitter.com/vZMtMSndp1
— Cory Swan.com #Bitcoin WORKS (@coryklippsten) February 26, 2023
Ethereum advocates, for example, will often contend that the blockchain is highly decentralised, despite the fact that 70% of ETH was pre-mined before the ETH presale (which the Ethereum Foundation has been gradually dumping over the last few years), and currently only three entities control over 50% of validators.
Will he cripple the US crypto industry?
The clarity of recognising that Bitcoin is a commodity thanks to its “unique origin story” and that everything else is a security thanks to its higher level of centralisation, means that Gensler is not wrong to take this position.
Other than Bitcoin, every major crypto asset has insiders that have the ability to change the rules, and governance structures that are inherently centralised.
This won’t hinder the US crypto industry. Countries like El Salvador have stated that anything other than Bitcoin is a security, and their economy has been thriving lately due to their regulatory stance. The US has never been the most welcoming country for crypto, but the main problem has been the unclear guidelines on what is allowed and what is not.
Relevant news:
- Our Cryptocurrency Guides
- How to Buy Bitcoin – Beginner’s Guide
- Gary Gensler Says SEC to Recommend a Pathway for Crypto Firms for Registering Tokens That’s “Flexible”
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