- Attorneys argue that the SEC lacks the ability to regulate any token
- The SEC is pushing for more regulatory monitoring of cryptocurrency platforms
- The Howey test is still used to test whether an asset is a security.
Attorneys who specialise in cryptocurrencies have criticized the Chairman of the U.S. Securities and Exchange Commission, who stated in a recent interview that all cryptocurrencies other than Bitcoin are securities subject to the SEC’s oversight.
Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), said that every crypto token other than Bitcoin falls under the agency’s authority in a recent interview with New York Magazine on cryptocurrencies.
He asserted that other cryptocurrency ventures are securities since Bitcoin does not have an intermediate group from which the public expects profits.
SEC’s limitations
Pro-cryptocurrency attorney Jake Chervinsky, policy lead at Blockchain Association, a bitcoin advocacy group, stated on Twitter that Gensler’s opinion is not the law.
Until and unless the SEC establishes its jurisdiction over each specific token in court, he continued, it lacks the ability to regulate any token.
A lawyer who chimed in on the debate, Logan Bolinger, tweeted that Gensler’s views on what constitutes a security or not are not legally conclusive, or the final legal judgement.
Gensler’s remarks, according to Jason Brett, the policy director at the advocacy group Bitcoin Policy Institute, “shouldn’t be welcomed, but feared.”
In a series of tweets, Gabriel Shapiro, general counsel at investment firm Delphi Laboratories, described the SEC’s almost impossible enforcement requirements on the industry in order to uphold its regulation.
Gensler claims that over 12,300 tokens totaling $663 billion are unregistered securities that are prohibited in the United States. As Chervinsky mentioned, the agency would have to sue each token creator because there are over 12,300 tokens.
SEC registered for National Exchange?
More regulatory monitoring of cryptocurrency platforms and products that could be involved in the offering and sale of securities is being pushed for by the SEC. Unlike other assets like commodities, securities are carefully regulated and need thorough disclosures to alert investors of potential dangers.
Түзүлгөндөн бери cryptocurrency in 2009, there has been much discussion about how to precisely classify the elements of this brand-new, decentralised financial ecosystem.
The SEC bases its definition of a token as a security on legal criteria like the so-called Howey Test.
Dennis Kelleher, CEO of Better Markets, a Washington, D.C. based organization that advocates for stricter financial protections, claimed that the SEC consistently applied long-standing, well-known, and explicit securities regulations to cryptocurrency activity. He further stated that the primary issue is that the cryptocurrency sector has consciously opted not to abide by these securities laws.
This unofficial benchmark for what constitutes improper digital assets has now been established by a number of cases. How the SEC is supporting Gensler’s claim that practically all of the tokens in circulation are securities is the trillion-dollar question. Last week, the chairman stated that any token, almost always has business interests attached, checking one of the boxes for what his agency considers while conducting its securities testing.
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Source: https://www.thecoinrepublic.com/2023/02/28/does-crypto-qualify-as-a-security-lawyers-question-sec-chair/