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 that fall within his jurisdiction.
In a wide-ranging interview given to New York Magazine on cryptocurrency on February 23, the chairman of the United States Securities and Exchange Commission, Gary Gensler, stated that “everything that is not bitcoin” is the purview of the agency.
He added that other cryptocurrency projects “are securities because there is a pool in the middle and the public is anticipating benefits based on that pool,” which he says is not the case for bitcoin.
Gensler in @NYMag on crypto:
-everything is a security except bitcoin
-every company out there is in violation
-crypto is pointless but blockchain is kinda neat
Hard to argue you’re acting in good faith if admittedly trying to stamp out an entire industry. pic.twitter.com/Ozw8ZJ3ETO
—Alexander Grieve (@AlexanderGrieve) February 26, 2023
Gensler at @NYMag on cryptocurrency:
-everything is a value except bitcoin
-all companies are violating securities laws
-Cryptocurrencies do not make sense, but blockchain is very good.
It’s hard to argue that you’re acting in good faith if you’re trying to take down an entire industry.
Jake Chervinsky, a lawyer and policy officer for the crypto advocacy group Blockchain Association, argued in a February 26 tweet that Gensler’s “opinion is not the law.” despite its supposed dominance of the cryptocurrency sector.
Chair Gensler may have prejudged that every digital asset aside from bitcoin is a security, but his opinion is not the law. The SEC lacks authority to regulate any of them until and unless it proves its case in court. For each asset, every single one, individually, one at a time.
—Jake Chervinsky (@jchervinsky) February 26, 2023
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 and unless it proves its case in court. For each asset, each one, individually, one by one.
He added that “until and unless” the SEC “proves its case in court” for its jurisdiction over each individual token “one at a time”, it “lacks the authority to regulate any of them.”
Lawyer Logan Bolinger also weighed in: he tweeted on February 26 “that Gensler’s views on what is or is not a security are not legally dispositive.”which means that it is not the final legal determination.
Friendly reminder that Gensler’s opinions on what is or isn’t a security are not legally dispositive.
In this country, judges – not SEC chairs – ultimately determine what the law means and how it applies.
Doesn’t mean his thoughts are irrelevant. They’re just not device.
— Logan Bolinger (@TheWhyOfFI) February 26, 2023
Friendly reminder that Gensler’s views on what is or is not a security are not legally dispositive. In this country, it is the judges, not the SEC chairmen, who ultimately determine what the law means and how it is applied. That doesn’t mean their opinions are irrelevant. They are simply not determinative.
“Judges – not SEC chairmen – ultimately determine what the law means and how it is applied,” Bolinger added.
Policy officer 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 via a regulatory moat. And anytime this is the way, the script can be flipped and before you know it, everyone is crying due process. Gensler’s comments about him in NY Magazine shouldn’t be celebrated, but feared.
— Jason Brett (@RegulatoryJason) February 26, 2023
The Gary Gensler thing is not good. There are ways to win other than through a regulatory moat. And as long as this is the way, the script can be flipped and before you know it, the whole world is crying for due process. Gensler’s comments in NY Magazine should not be celebrated, but feared.
SEC needs 12,305 lawsuits: Delphi Labs adviser
For his part, Gabriel Shapiro, a counsel at investment firm Delphi Labs, outlined in a series of tweets the seemingly impossible enforcement the SEC would have to carry out on the industry to cement its rule.
Shapiro said that More than 12,300 tokens worth about $663 billion are – according to Gensler – unregistered securities that are illegal in the United States and, as Chervinsky mentioned, the agency would have to file a lawsuit against each token creator.
According to Shapiro, The SEC has handled cryptocurrency in two main ways: by fining token creators and requiring the issuer to register, or by fining them and ordering the tokens created to be destroyed and delisted from exchanges.
So far, SEC has handled tokens in mainly 2 ways:
(1) fine + registration requirement–this failed every time so far, with the companies becoming bankrupt
(2) fine + order to destroy all premined tokens and delist tokens from all exchanges
both ways, tokens go to $0
— _gabrielShapir0 (@lex_node) February 26, 2023
Until now, the SEC has dealt with tokens primarily in two ways:
(1) fine + registration obligation, which until now has always failed and led companies to bankruptcy.
(2) fine + order to destroy all pre-mined tokens and delist tokens from all exchanges.
in both cases, the tokens go to 0
“SEC registration is not only too expensive for most token creators: there is also no clear path to token registration,” Shapiro said, and I add:
“What is the plan here? Since registration is not feasible, it can only be that everyone pays huge fines, stops working on the protocols, destroys all development premins, and removes [los tokens] of the negotiation. That would mean 12,305 lawsuits.”
“What’s the plan? We’re all wondering, and billions of [dólares] Americans are at risk.”
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