Securities and Exchange Commission Chairman made it clear Wednesday that he won't make exceptions for cryptocurrency when it comes to defining what is or what isn't a security.
"We are not going to do any violence to the traditional definition of security that has worked for a long time," U.S. Securities and Exchange Commission Chairman Jay Clayton told CNBC Wednesday. "We've been doing this a long time, there's no need to change the definition."
The financial watchdog has been balancing consumer protection and innovation in what has become multi-billion dollar cryptocurrency market. The market capitalization of bitcoin alone is more than $130 billion, according to CoinMarketCap.
On Tuesday, the SEC picked a new leader for its emerging cryptocurrency division. Valerie Szczepanik, who already worked at the agency, was promoted to a role that didn't exist until this week: Associate Director of the Division of Corporation Finance and Senior Advisor for Digital Assets and Innovation.
Clayton made it clear in March that all ICOs constitute securities. But companies tied to those cryptocurrencies have argued that some should be fall under a different category, in many cases because of their utility.
Whether an asset is a security right now follows the "Howey Test." The ruling comes from a 1946 U.S. Supreme Court case that classifies a security as an investment of money in a common enterprise, in which the investor expects profits primarily from others' efforts.
Bitcoin began its price descent in March, falling below $10,000 after the agency said it would require digital asset exchanges to register with the agency.
Prices have struggled to recover since. Bitcoin is down roughly 50 percent in 2018 after climbing more than 1,300 percent last year, according to data from CoinDesk. The cryptocurrency was trading near $7,638 as of 10 a.m. ET Tuesday.