Securities and Exchange Commission (SEC) Chairman Gary Gensler has been criticized for his understanding of digitized assets. An alarming development considering the SEC’s recent decisions on several high-profile nft collections.
During a lengthy committee hearing on September 27, U.S. Rep. Ritchie Torres questioned Gensler about what essentially qualified an nft as a security. Using Pokémon cards as an example, Torres proceeded to impress upon Mr. Gensler that these popular collectible cards do not fall within his purview.
However, when Torres pressed further and asked whether the same cards, if tokenized on a blockchain, would be classified as securities, Gensler struggled to give a clear and coherent answer.
Undeterred by the lack of a definitive answer, Ritchie Torres continued digging, seeking clarification on whether the tokenization process itself was the key factor in categorizing an nft as a “security.” However, his line of questioning was ultimately met with blank stares and hesitant responses.
Gensler’s responses throughout the exchange were punctuated by phrases such as “I should know more” and “If the investing public anticipates profits based on the efforts of others and exchanges funds, that is the core of the Howey test.” These vague statements only added to the confusion surrounding the nft regulatory framework.
Securities and Exchange Commission Fails to Impress
This exchange between members of US governing bodies has drawn attention to the SEC’s treatment of NFTs. In recent months, the commission has accused both Stoner Cats and Impact Theory of violating federal securities laws. Meanwhile, many other nft projects remain firmly in the crosshairs of decision makers who have very little knowledge of the industry they work with.
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