The SEC Chair sets the Agency’s sights on Cryptocurrencies

On October 5, 2021, Securities and Exchange Commission Chairman Gary Gensler addressed the House Financial Services Committee regarding the agency’s role in regulating the cryptocurrency markets. His remarks regarding Congress’ need to fill the regulatory gaps in cryptocurrency markets have been criticized as confusing considering his past statements that most cryptocurrencies are securities and therefore already fall under the SEC’s regulatory scheme. Adding to the uncertainty is his refusal to stake out a clear position as to whether the two biggest cryptocurrencies, Bitcoin and Ethereum, are securities.

The SEC and its state counterparts presently apply the Howey[1]/Forman[2] tests set down by the U.S. Supreme Court in analyzing whether cryptocurrencies are “investment contracts” within federal and state securities laws. This fact extensive analysis that is applied on a case-by-case basis may lead to different results from one cryptocurrency to another. Consequently, if faced with an enforcement action by either the SEC or the States of Missouri, you may wish to consult with experienced securities enforcement counsel at Cosgrove Law Group.


[1] S.E.C. v. W.J. Howey Co., 328 U.S. 293, 66 S. Ct. 1100, 90 L.Ed. 1244 (1946) and 293,

[2] United Housing Foundation, Inc. v. Forman, 421U.S. 837, 95 S. Ct. 2051, 44 L. Ed. 2d 621 (1975)