Crypto lawyers have criticized Gary Gensler, the head of the US Securities and Exchange Commission (SEC), for claiming that all cryptocurrencies except Bitcoin are securities falling under the agency’s jurisdiction.
In a recent interview with New York Magazine, Gensler asserted that “everything other than Bitcoin” falls under the SEC’s remit because other crypto projects “are securities because there’s a group in the middle and the public is anticipating profits based on that group.”
However, crypto lawyers have challenged Gensler’s allegations, contending that SEC lacks legal authority to regulate the crypto industry.
Jake Chervinsky, a lawyer and policy lead at the crypto advocacy group the Blockchain Association, pointed out that Gensler’s opinion is not the law. SEC needs court validation for jurisdiction over each token to regulate.
Similarly, Logan Bolinger, an attorney, said in a Feb. 26 tweet that Gensler’s opinion on what is or isn’t a security is not legally binding and that judges — not SEC chairs — ultimately determine what constitutes a security. What the law means and how it applies.
Jason Brett, the policy lead at the advocacy body Bitcoin Policy Institute, expressed concern over Gensler’s comments, stating that they shouldn’t be celebrated but feared and that there are ways to win other than via a regulatory moat.
Gabriel Shapiro, the general counsel at Delphi Labs, emphasized the impracticality of SEC enforcement.
According to Gensler, over 12,300 tokens worth around $663 billion are unregistered securities that are illegal in the US. The agency would have to file a lawsuit against each token creator to enforce its regulation.
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The SEC Had Handled Crypto In Two Main Ways:
According to Shapiro, the cost of SEC registration is exorbitant and unaffordable for most token creators. Additionally, there needs to be more clarity on registering tokens, which adds to the situation’s complexity.
Shapiro said, “Without registration, imposing fines, stopping protocol development, eradicating pre-mined coins, and delisting tokens would lead to 12,305 lawsuits.”
Given the significant risk to billions of American dollars, there needs to be a concrete plan to address this issue.
In conclusion, crypto lawyers are challenging Gensler’s claim that all cryptocurrencies, except Bitcoin, fall under the SEC’s jurisdiction. They are requesting the agency to substantiate its case for each token in court.
They argue that judges, not SEC chairs, determine the law’s meaning and how it applies. Additionally, enforcing regulation on the vast number of unregistered securities in the crypto space would be daunting for the SEC.
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