"Ooooohhhh GAR-EEEEE"
"Looks like you f***ed up a little Mr Genslerrrrrrrrr."
Gary Gensler gave testimony before the House Financial Services Committee today and all I can say is my goodness. We’ll get to some of the highlights from that hearing in a moment. But first, a disclosure; I don’t care for Gary Gensler. I think he’s doing a crappy job as SEC Chairman. My feelings are generally shared by all of “CryptoTwitter” and it’s probably best illustrated by the bonkers 8:1 comment to like ratio from Gensler’s tweet congratulating himself on completing his second year in the role:
As vicious as that was, it wasn’t even the most interesting thing from CryptoTwitter regarding Gensler yesterday. In a lawsuit against crypto exchange Bittrex that was filed yesterday, the SEC claimed 6 tokens were unregistered securities. The most notable of which is probably Algorand (ALGO-USD). According to the SEC:
in promoting the ALGO token sale, the Algorand Foundation tied the potential growth of the Algorand blockchain to potential demand for the ALGO token itself
This is very interesting because Gary Gensler has actually spoken about Algorand in a very positive light publicly. In an admittedly very good 2019 MIT Sloan presentation, Gensler spoke glowingly of Algorand and theorized that companies like Uber UBER 0.00%↑ could build on top of the Algorand blockchain in the future.
As you might expect, CryptoTwitter had a field day with this. I’m very thankful to now know who Gabriel Haines is and his hilarious reaction led to the creation of this banger of a song:
Gotta love human creativity.
Now, in the interest of maintaining my own integrity I think it’s important to mention that the MIT Sloan presentation was from April 2019 and Algorand didn’t do its public token sale until June of that year.
I suspect if you asked Gensler in July of 2019, he’d say the ALGO token sale is what makes ALGO an unregistered security and he’d likely have a different view on Algorand now. But that’s really the fundamental problem and it’s the core issue that many crypto advocates like myself have had with Gensler; we have to guess. Nobody really knows for sure.
Main Takeaway From Today
I could list all of the ways that today’s hearing was eye opening. From Tom Emmer answering his own questions for Gary Gensler to Bryon Donalds stripping him completely naked figuratively and everything in between. We had Ohio’s Warren Davidson say:
Chairman Gensler, your record of failures and abuses of power make it clear that we need to restructure the securities and exchange commission
Followed immediately by Texas’ Sylvia Garcia saying:
I know you’re probably hungry and maybe thirsty too. But bear with us we’re almost there. If you need to go potty or take a nap, let us know and we’ll call an early recess.
Okay, I made up that bolded part. But she really said the first part. Regardless, the main takeaway from today is very simple. Gary Gensler says the rules are clear. But he repeatedly refused to answer a very simple question. Is Ethereum (ETH-USD) a commodity or a security?
Forget all of the side show stuff. This is a basic question. Ethereum is the second largest asset in the crypto market. The CFTC says it is a commodity. The SEC has insinuated that it is a security. Yet, while under oath Gensler, the chair of the agency, refuses to answer a yes or no question. Why? I suppose we should just continue guessing.
Disclaimer: I’m not an investment advisor. I’m personally long ETH and ALGO.