Cryptocurrency lawyers have rejected comments made by the head of the US securities regulator, who claimed in a recent interview that all cryptocurrencies except Bitcoin (BTC) are securities under its jurisdiction.
23 discussing crypto, Securities and Exchange Commission Chairman Gary Gensler stated that “everything but Bitcoin” falls within the agency’s mandate.
He added that other crypto projects “are securities because there is a group in the middle and the public is anticipating profits based on that group,” which he said is not the case for Bitcoin.
Gensler in @NYMag in encryption:
-everything is a security except bitcoin
-every company out there is in violation
-crypto is useless, but blockchain is cool
Hard to argue that you’re acting in good faith if you’re trying to shut down an entire industry. pic.twitter.com/Ozw8ZJ3ETO
— Alexander Grieve (@AlexanderGrieve) February 26, 2023
Jake Chervinsky, a lawyer and policy lead at cryptocurrency advocacy group Blockchain Association, argued, however, in a Feb. .
President Gensler may have prejudged that every digital asset other than bitcoin is a security, but his opinion is not the law. The SEC lacks the authority to regulate any of these until and unless it proves its case in court. For each asset, each individually, one at a time.
— Jake Chervinsky (@jchervinsky) February 26, 2023
He added “until and unless” the SEC “proves its case in court” for its jurisdiction over each individual token “one at a time”, then it “has no authority to regulate any of them.”
Attorney Logan Bolinger also chimed in, tweeting Feb. 26 “that Gensler’s views on what is and is not a security are not legally binding” — meaning it’s not the final legal determination.
Friendly reminder that Gensler’s views on what is and is not a security are not legally binding.
In this country, judges – not SEC chairmen – determine what the law means and how it applies.
It doesn’t mean your thoughts are irrelevant. They are simply not devices.
—Logan Bolinger (@TheWhyOfFI) February 26, 2023
“Judges – not SEC chairmen – determine what the law means and how it applies,” added Bolinger.
Bitcoin Policy Institute policy lead Jason Brett said Gensler’s comments “should not be celebrated but feared” and stated, “there are ways to win beyond a regulatory moat.”
The Gary Gensler thing is not good. There are ways to win beyond a regulatory divide. And whenever that goes the way, the script can be flipped and before you know it, everyone is crying over the process. Gensler’s comments in NY Magazine are not to be celebrated, but feared.
— Jason Brett (@RegulatoryJason) February 26, 2023
SEC needs 12,305 lawsuits: Delphi Labs lawyer
Meanwhile, Gabriel Shapiro, general counsel at investment firm Delphi Labs, outlined in a series of tweets the seemingly impossible imposition the SEC would have to take on the industry to consolidate its rule.
Shapiro said that over 12,300 tokens worth around $663 billion are – according to Gensler – unregistered securities that are illegal in the US and, as mentioned by Chervinsky, the agency would have to file a lawsuit against each token creator. .
Related: Emojis count as financial advice and have legal consequences, judge rules
The SEC has dealt with crypto in two main ways, according to Shapiro: by fining token creators and requiring the issuer to register, or by fining them and ordering the tokens created to be destroyed and taken off exchanges.
Until now, the SEC has dealt with tokens mainly in 2 ways:
(1) fine + registration requirement – this has failed every time so far, with companies going bankrupt
(2) fine + order to destroy all pre-mined tokens and remove tokens from all exchanges
both ways tokens go to $0
— _gabrielShapir0 (@lex_node) February 26, 2023
“SEC registration is not only too expensive for most token creators – there is also no clear path for token registration,” Shapiro said, adding:
“What’s the plan here? Since registration is not feasible, it can only be (that) everyone pays huge fines, stops working on protocols, destroys all development premines and excludes (tokens) from trading. That would mean 12,305 lawsuits.”
“What’s the plan? We’re all wondering, and billions of Americans (dollars) are at risk.”