Ethereum’s Ether and Ripple’s XRP should be categorized as non-compliant securities, according to the former head of the Commodity Futures Trading Commission (CFTC), Gary Gensler. Bitcoin is exempt from this categorization, Gensler added in an interview with The New York Times.

ETH And XRP Trading Illegally

The man who was in charge of the CFTC from 2009 to 2014 weighed in on one of the most controversial topics in the crypto industry in recent times, a possible foreshadow of the looming SEC decision on how to categorize cryptocurrencies. Ethereum and Ripple are the two most valuable altcoins in today’s market, with a combined value of $97 billion at the time of writing.

The categorization of Ether and XRP as securities would have great consequences on not just the two cryptos, but given their significance, on the crypto community as a whole. To begin with, this would render it illegal for Americans to trade these cryptos on the many crypto exchanges that currently offer them. This would drive the demand down by a great margin, and the price of these cryptos would naturally take a huge hit. With the crypto markets being very speculative, such news might also have the secondary effect of causing panic among most investors, which would drive them to dump their cryptos in panic, further worsening the situation.

While Gensler’s opinion should not be taken lightly, it is in no way a definitive foreshadow of the SEC’s decision on the categorization of cryptos. The SEC and the CFTC have been working on coming up with a comprehensive regulatory framework for the crypto industry, including whether or not to categorize cryptos as securities.

Gensler also explained that Bitcoin might not be destined for the same fate. Bitcoin was not issued through an ICO and has a decentralized network of developers. He, however, singled out ETH and XRP as possibly being categorized as securities, especially the latter. With Ripple holding most of the nodes in its network, its decentralization has been called into question by many, and this may be one of the reasons Gensler singled it out.

Definitely Not A Security

Both Ripple’s and Ethereum’s communities have appealed to the SEC to not categorize them as securities. Less than a week ago, reports emerged that a group of lawyers and other experts from Andreessen Horowitz and Union Square Ventures had jointly pleaded with the SEC not to categorize Ethereum as a security. The group, which goes by the name Venture Capital Working Group, argued that Ethereum has become so decentralized that it shouldn’t be considered a security.

Ripple’s chief market strategist and former Bloomberg tech reporter Cory Johnson expressed his belief that XRP isn’t a security in an interview with CNBC.

We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law.

The Times report also indicated that Gensler is currently working at MIT, where he will teach about the potential of blockchain technology. He is particularly keen to indulge in discussions on the interaction of cryptos with regulation, viewing 2018 as the year when most crypto projects will need to figure out how to come into compliance with US securities laws.