April 28 (Cointime) - The crypto community has criticized SEC Chairman Gary Gensler for using a dog-goldfish analogy in a video tweet on April 27 to emphasize the significance of complying with security laws.

In his analogy, Gensler compared crypto platforms offering "investment contracts" to walking a dog without a leash and calling it a goldfish to avoid legal issues. He argued that security laws were vital for safeguarding investors and that the lack of regulatory compliance, rather than regulatory clarity, was a problem for crypto markets. He stated:

"Many crypto platforms are just pretending that these investment contracts that they offer are more like goldfish, and the lack of compliance by these crypto platforms means that you don’t have basic investor protections."

He also observed that many crypto platforms combine the functions of an exchange, a broker-dealer, and a clearing house, and failing to register these activities endangers investors. Gensler emphasized that "If you make securities available to American investors, you must comply with American laws" regardless of whether a platform is onshore or offshore. He further stated that "If you’re a securities exchange, clearing house, broker-dealer, you must come into compliance, register with us and deal with conflicts of interest and disclose important information."

Gensler's analogy received quick backlash from the crypto community. Twitter user @sirspacesape commented with a video revealing Gensler's conflicting stance on crypto back in 2018. In the 2018 video, Gensler is quoted as stating that “three-quarters of the market is non-securities. It’s just a commodity. A cash crypto.”