Cryptocurrency lawyers have rejected comments made by the head of the United States securities regulator, stating in a recent interview that all cryptocurrencies except Bitcoin (BTC) are securities that fall under his jurisdiction.
In a wide-ranging Feb. 23 New York Magazine interview on crypto, Securities and Exchange Commission (SEC) Chairman Gary Gensler claimed that “everything other than Bitcoin” falls under the agency’s mandate. .
He added that other crypto projects “are values because there is a pool in the middle and the public anticipates gains based on that pool,” which he said is not the case for Bitcoin.
Gensler in @NYMag in crypto:
-everything is a value except bitcoin
-all companies are in violation
-crypto doesn’t make sense, but blockchain is kind of neat
It’s hard to argue that you’re acting in good faith if you’re actually trying to take down an entire industry. pic.twitter.com/Ozw8ZJ3ETO
—Alexander Grieve (@AlexanderGrieve) February 26, 2023
However, Jake Chervinsky, an attorney and policy leader at the Blockchain Association, a cryptocurrency advocacy group, argued in a February 26 tweet that Gensler’s “opinion is not the law” despite his alleged dominance over the cryptocurrency industry.
Chairman Gensler may have prejudged that all digital assets aside from bitcoin are securities, but his opinion is not the law. The SEC lacks the authority to regulate any of them until it proves its case in court. For each asset, each one, 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 “lacks the authority to regulate any of them.”
Attorney Logan Bolinger also weighed in, tweeting on Feb. 26 “that Gensler’s views on what is or is not a security are not legally dispositive,” meaning it is not the final legal determination.
Friendly reminder that Gensler’s views on what is and is not a security are not legally dispositive.
In this country, judges, not SEC chairs, ultimately determine what the law means and how it is applied.
It does not mean that your thoughts are irrelevant. They are just not devices.
— Logan Bolinger (@TheWhyOfFI) February 26, 2023
“Judges, not SEC chairmen, ultimately determine what the law means and how it is applied,” Bolinger added.
Policy lead at the advocacy body Bitcoin Policy Institute, Jason Brett, said Gensler’s comments “should not be celebrated, but feared” and stated that “there are ways to win other than through a regulatory moat.”
The Gary Gensler thing is not good. There are ways to win other than through a regulation moat. And anytime this is the way the script can change and before you know it everyone is crying due 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, the general counsel of investment firm Delphi Labs, outlined in a series of tweets the seemingly impossible application the SEC would have to make to the industry to cement its rule.
Shapiro analyzed that more than 12,300 tokens worth around $663 billion are, according to Gensler, unregistered securities that are illegal in the US and, as Chervinsky mentioned, the agency would have to file a lawsuit against each creator. of tokens.
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The SEC had handled cryptocurrency in two main ways, according to Shapiro: either by fining token creators and requiring the issuer to register, or by fining and ordering the created tokens to be destroyed and removed from exchanges.
Until now, the SEC has mainly handled tokens in 2 ways:
(1) fine + registration requirement: this failed every time so far, and the companies went bankrupt
(2) fine + order to destroy all premined tokens and remove tokens from all exchanges
either way, chips go to $0
— _gabrielShapir0 (@lex_node) February 26, 2023
“Not only is SEC registration too expensive for most token creators, but there is also no clear path to token registration,” Shapiro said, adding:
“What is the plan here? Since registration is not feasible, it can only be (that) everyone pays huge fines, stops working on protocols, destroys all development premins, and removes listings (tokens) from trading. That would mean 12,305 lawsuits.”
“What’s the plan? We’re all wondering, and billions of US (dollars) are at risk.”