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SEC Chairman Gensler Comments on Bitcoin and Ethereum; Avoids Ethereum Security Classification

On March 6, SEC Chairman Gary Gensler opted not to disclose whether the U.S. Securities and Exchange Commission categorizes Ethereum as a security or a commodity. This decision was eagerly awaited by the market due to its potential ramifications for the approval of Ethereum ETFs.

Gensler made this choice during an appearance on Bloomberg TV, where he addressed various topics including the turbulence at the NYCB, gas emissions, and cryptocurrencies.

Is Ethereum a Security or a Commodity?

During his appearance on TV, Gary Gensler refrained from disclosing the regulator’s perspective on Ethereum, despite market anticipation for the agency to greenlight a spot ETH ETF after approving Bitcoin funds in January.

To date, the agency has postponed its verdict on approving or denying any of the Ether ETF applications, including those from prominent entities such as BlackRock, Galaxy, and Fidelity.

While Gensler remained tight-lipped about the SEC’s position on Ether, he did touch upon the speculative characteristics of cryptocurrencies, drawing parallels between their volatility and roller coaster rides.

He voiced apprehensions regarding the erratic nature of cryptocurrencies like Bitcoin and Ethereum, urging investors to exercise caution when engaging in transactions involving them.

Gary Gensler elaborated on the recent volatility of Bitcoin, likening it to his fondness for roller coasters from his youth. He emphasized the need for caution among investors, acknowledging the roller coaster-like nature of volatile assets.

While the SEC’s position on Ether remains undisclosed, many within the cryptocurrency industry advocate for classifying Ether as a commodity rather than a security.

Several global regulators, including the U.S. Commodity Futures Trading Commission and the UK Financial Conduct Authority (FCA), already recognize Ether as a commodity. This classification is further supported by the approval of Ethereum Futures ETFs last year.

Bloomberg’s ETF analyst, James Seyffart, suggested that the SEC implicitly acknowledged Ether as a commodity by approving the futures ETFs. He also argued that the SEC did not contest ETH’s classification as a commodity when registered with the CFTC. The first ETH futures ETF began trading on October 2.

Multiple Ethereum ETF Delays Expected

The SEC’s prolonged response to Ether ETF applications comes as no surprise to many market observers. The agency has the authority to postpone its decision up to three times before reaching a final verdict.

May 23, 2024, marked a critical milestone according to Seyffart, as it signaled the deadline for the SEC to provide a response regarding VanEck’s spot ETH ETF application. This date holds significant importance in determining the fate of Ethereum ETFs.

Despite the anticipation surrounding the VanEck deadline, some voices in the market suggest that a spot Ether ETF might not have the same impact as Bitcoin ETFs. Bloomberg ETF analyst Eric Blachunas expressed a subdued outlook, considering the spot ETH ETF to be relatively minor compared to the trading volumes of Bitcoin ETFs.

Since their approval, Bitcoin ETFs have consistently reached new milestones. Just recently, the ten-spot Bitcoin ETFs surpassed their previous trading volume record by processing $10 billion in transaction volume. The robust demand for these funds, coupled with the upcoming Bitcoin halving, are significant catalysts that could further drive up prices.

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I want to save money. Will cryptocurrency work?

Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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