In a recent Fox Business News interview, the SEC chair offered some more clarity with respect to regulations, with the focus being on the evergreen security v., not a security debate.
Specifically outlining what falls under the purview of security, Gensler went on to highlight how in the 1930s, after the collapse of the markets and the public getting defrauded, there was basic bargaining. The Congress, at that time, wrote with a very broad brush, the definition of security. Elaborating on the same, Gensler said,
“They included 32 different terms and amongst those terms, the conceptional framework is the public investing money anticipating profits on the efforts of others. And the Supreme Court in the 1940s and multiple times since then has had the same approach. My predecessor Sir Jay Clayton said it, and as well as I could say it, that in looking at these tokens it is rare to find one that isn’t doing that.”
Well, the financial landscape has evolved over the years and the market’s dynamics have parallelly changed. In such a scenario, using a definition laid down in the 1930s as a yardstick to classify assets as securities doesn’t hold water.