SEC’s Gary Gensler agrees that “every ICO is a security”

On Tuesday the of the Securities and Exchange Commission, Gary Gensler remarked that it would sternly regulate cryptocurrency markets using existing rules.

Among other points, Gensler continued on the enduring importance of the Howey Test: If a financial instrument promises returns from the efforts of others, it’s a security and can be regulated by the SEC. He said:

In a speech at the Aspen Security Forum on Tuesday, Gensler said he agreed with Jay Clayton, his predecessor at the SEC, who said that in his view, “every ICO I’ve seen is a security.” In prepared remarks, Gensler said:

“Generally, folks buying these tokens are anticipating profits, and there’s a small group of entrepreneurs and technologists standing up and nurturing the projects.”

He added:

“I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight.”

With this he was mainly referring to Initial Coin Offerings, or ICOs, a fundraising process in which tokens are offered to (early) investors before building a system. ICO’s have been deceptive in the past with shady operators selling (fake)tokens.

Gensler’s full speech can be read in full here.

Following Gensler’s words, markets have barely reacted and responses from some industry leaders and analysts were accepting, and even positive. Bitcoin even jumped up slightly this morning.

On Wednesday, Gensler appeared on CNBC’s Squawk Box and said to be “pro innovation,” and in all fairness, it seems that the crypto space actually believe him. Gensler is generally known for his deep knowledge of both the promise and technical underpinnings of blockchain and cryptocurrencies.