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SEC suggests three cryptocurrencies to be considered securities

Yahoo Finance's Jennifer Schonberger joins the Live show to discuss the SEC's continued efforts to bring crypto in-line with existing regulations.

Video Transcript

BRIAN SOZZI: Grayscale Investments in the sights of the US Securities and Exchange Commission as the SEC continues its efforts to bring cryptos in line with its existing regulations. For more on this, let's bring in Yale Finance's Jennifer Schonberger. Jen?

JENNIFER SCHONBERGER: Good morning, Brian. That's right, three cryptocurrencies might be considered securities, according to new regulatory filings with the SEC. Grayscale Investments disclosed in regulatory filings that the SEC has been asking about its securities law analysis of crypto tokens Zcash, Horizon, and Stellar held in its investment trust. The agency suggesting that these cryptocurrencies might be securities under federal law. Now, Grayscale, which offers trusts containing crypto through funds on traditional stock exchanges as an easy way to invest in crypto, did not immediately respond for comment.

Now, this coming after the SEC in July declared three-- excuse me-- declared nine crypto assets listed in a crypto insider trading case as securities and as the SEC has been looking to define its oversight of cryptocurrencies through enforcement actions. Experts say Stellar, which is similar to Ripple, is close to two years into a legal battle with the SEC over whether the token is a security.

Now, SEC chair Gary Gensler wrote in an op-ed in "The Wall Street Journal" on August 19, quote, "There's no reason to treat the crypto market differently from the rest of capital markets just because it uses a different technology."

Gensler has repeatedly said that many crypto tokens fall under securities laws, given how they're used, and that most tokens other than Bitcoin or perhaps Ethereum, I should say, should register as securities. Yet there's still no formal rule process in place for how to govern crypto. Gensler and the SEC have repeatedly asked crypto players to come in proactively and register with the Commission. As well, they have been regulating through enforcement actions for parties they feel are not in compliance. So an ongoing theme here with the SEC. Brian?

BRIAN SOZZI: Jennifer Schonberger, thanks so much.