SEC Chair Says Many Crypto ICOs Fall Outside Agency’s Jurisdiction
SEC Chair Gary Gensler told lawmakers that many token sales and certain types of crypto initial coin offerings (ICOs) do not fall within the Securities and Exchange Commission’s enforcement or regulatory purview. Gensler emphasized that while the SEC enforces securities laws where tokens meet the Howey test, a range of token offerings — including some utility tokens and certain decentralized protocol distributions — may not be securities. He urged Congress to clarify jurisdictional boundaries and update federal law to address crypto-specific structures and market conduct. The chair reiterated the SEC’s focus on investor protection where token sales involve investment contracts, and said gaps in statutory authority hamper consistent oversight. The remarks signal the SEC’s preference for clearer legislative guidance rather than widening agency reach unilaterally. Primary keywords: SEC, ICOs, crypto regulation. Secondary keywords: Gary Gensler, Howey test, token sales, Congress, investor protection.
Neutral
The statement clarifies jurisdictional limits rather than announcing new restrictions or approvals, so it is unlikely to trigger an immediate directional move in crypto markets. By saying many ICOs may be outside the SEC’s purview, the remark reduces near-term regulatory uncertainty for projects that can convincingly argue they are not securities — a modest positive. However, Gensler’s emphasis on enforcing securities laws where the Howey test applies, and his call for clearer legislation, keep regulatory risk present for token offerings that resemble investment contracts. Historically, enforcement actions and clear adverse rulings have produced short-term negative price reactions (e.g., past SEC actions against token issuers), while signals that regulators may not pursue certain categories can calm volatility. Therefore, expect neutral-to-mildly bullish short-term sentiment for non-security tokens and continued caution for tokens with features of securities. Long-term impact depends on whether Congress clarifies law: clearer rules would reduce regulatory tail risk (bullish), while legislation that broadens SEC authority would be bearish for many tokens. Traders should monitor follow-up guidance, enforcement actions, and any legislative proposals addressing crypto jurisdiction.