It has become more than apparent that regulators will continue to focus their attention on the cryptocurrency industry for quite some time to come. Gary Gensler, a former regulator in the Obama administration, has made some very interesting comments. In his opinion, both Ethereum and XRP were issued and traded in violation of American securities regulations. It seems doubtful there will ever be evidence to back up such claims.  

ANOTHER ATTEMPT TO DISRUPT CRYPTOCURRENCY’S MOMENTUM

Most cryptocurrency enthusiasts are all too aware that regulators often try to disrupt positive momentum in the cryptocurrency industry. Every time the Bitcoin price goes up after a rough period, some form of regulatory news will pop up out of nowhere to scare off potential investors. We have seen this cycle repeat itself multiple times over, with China issuing new guidelines, banks cracking down on exchanges, and so forth.

The latest attempt is a very different creature altogether. Former financial regulator Gary Gensler is convinced that both Ether and XRP are in violation of American securities regulations. In his opinion, there is a “strong case” to be made that both currencies are noncompliant securities. Bitcoin, on the other hand, is exempt from this classification, as it was not “issued” in the same manner as the others.

It remains a bit unclear how Gensler has drawn this conclusion. It is true that Ethereum came to be thanks to a successful crowdsale many years ago. Whether or not that automatically makes it a security is unclear. Rest assured entities such as Coin Center will take a closer look at these comments and act accordingly. Designating XRP as a “noncompliant security” makes even less sense, but it will be interesting to see how that situation unfolds.

Gensler is now working at MIT where he will contribute findings related to blockchain technology. As such, his opinions will carry a lot of weight, which may not bode all that well for either Ethereum or Ripple. With both the SEC and CFTC cracking down on virtual currencies which may have violated securities laws, Gensler’s statement will certainly shake things up quite a bit. So far, it doesn’t appear to have spooked the market, which can only be considered a good thing.

We can expect more investigations involving Ethereum, Ripple, and other potential security violations throughout 2018. If Gensler is to be believed, over 1,000 ICOs and 100 exchanges providing access to these tokens and services will have a lot of explaining to do this year. It’s clear that initial coin offerings are still a very tricky creature without proper guidelines.

It will certainly be interesting to see how this situation plays out in the long run. If regulators decide to go after established cryptocurrencies yet leave Bitcoin out of the loop, a very interesting precedent will be created. So far, there is still no evidence to confirm that either Ether or XRP can be labeled as a security, but the final decision still rests with regulators. It’s a very peculiar development, and one that the cryptocurrency industry doesn’t need right now.

ExposedCrypto.com

Source: Themerkle

 

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