CFTC Chairman Shows Mistrust towards Ethereum and Ripple currencies
April 24, 2018 12:25 pm
Gary Gensler Shows Skepticism towards Ethereum and Ripple currencies
The former head of CFTC (Commodity Futures Trading Commission), Gary Gensler, states that according to him, Ripple and Ethereum are “noncompliant securities” and are trading illegally on several cryptocurrency exchanges that list them.
Gensler chaired the CFTC from 2009 to 2014 during the Obama administration and later worked as the chief financial officer for Hillary Clinton’s presidential campaign. Now, he works as a blockchain researcher at the Massachusetts Institute of Technology (MIT), where he also assists as a special adviser to the blockchain-friendly Media Lab and a senior lecturer at the Sloan School of Management.
He told the New York Times:
“There is a strong case for both of them — but particularly Ripple — that they are noncompliant securities.”
Gensler has made these remarks based on the fact that their creators sold the cryptocurrency and purchased them primarily as investments for speculative reasons. As reported by CNN, Ethereum was bootstrapped in an initial coin offering-style presale in 2014, by which investors bought Ether units that were shared once the Ethereum network originated in July 2015. Top officials at the SEC (Securities and Exchange Commission) recently refused to confirm an industry working group financed by venture capital firms Andreessen Horowitz and Union Square Ventures that Ether is not unofficially registered security. Nonetheless, Gensler mentioned that because Ethereum has been functional for almost three years and has attained a more decentralized development structure, it has a higher chance of dodging the “noncompliant securities” label than XRP and most ICOs.
San Francisco-based blockchain startup Ripple formulated XRP, and the company issues tokens at its preference through sales, grants, and other centralized means. Ripple has regularly alleged that XRP is not a security, though cryptocurrency exchange operator and brokerage firm Coinbase has recommended that it does not accept that there is a requirement for regulatory certainty that prevents it from listing the token.
Ripple spokesman Tom Channick told the NYT, “XRP does not give its owners an interest or stake in Ripple, and they are not paid dividends. XRP exists independent of Ripple, was created before the company and will exist after it.”
Meanwhile, Gensler said that he has faith that 2018 will bring a settlement for the cryptocurrency industry, as regulators continue to take a more active role in policing ICOs and other token sales that allegedly constitute unregistered securities offerings.
Gensler also said:
“2018 is going to be a very interesting time. Over 1,000 previously issued initial coin offerings and over 100 exchanges that offer ICOs are going to need to sort out how to come into compliance with U.S. securities law.”