Crypto lawyers fire Gensler over claims that all cryptos are securities
Cryptocurrency lawyers have rejected comments from the head of the US Securities and Exchange Commission, arguing in a recent interview that every cryptocurrency except Bitcoin (BTC) is a security that falls under its jurisdiction.
In a wide-ranging New York Magazine interview on February 23 discussing crypto, Securities and Exchange Commission (SEC) Chairman Gary Gensler claimed that “everything but Bitcoin” falls under the agency’s mandate.
He added other crypto projects “are securities because there is a group in the middle and the public expects profits based on that group,” which he said is not the case with Bitcoin.
However, Jake Chervinsky, an attorney and policy director at the Blockchain Association, a crypto advocacy group, argued in a February 26 tweet that Gensler’s “opinion is not the law” despite his purported command of the crypto sector.
He added “until and unless” the SEC “proves its case in court” for its jurisdiction over each symbol “one at a time,” then “it lacks the authority to regulate any of them.”
Attorney Logan Bolinger also weighed in on the matter, tweeting on February 26 “that Gensler’s opinions on what is or is not a security are not legally dispositive” – meaning it is not the final legal decision.
“Judges — not SEC executives — ultimately decide what the law means and how it applies,” Bolinger added.
The head of policy at the advocacy group Bitcoin Policy Institute, Jason Brett, said Gensler’s comments “should not be celebrated, but feared” and stated, “there are ways to win other than via a regulatory moat.”
SEC Needs 12,305 Lawsuits: Delphi Labs Counsel
Meanwhile, Gabriel Shapiro, the general counsel at investment firm Delphi Labs, outlined in a series of tweets the seemingly impossible enforcement the SEC would have to perform on the industry to cement its rule.
Shapiro analyzed that over 12,300 tokens worth about $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.
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The SEC had dealt with crypto in two main ways according to Shapiro: Either fine token creators and require the issuer to register, or fine them and order the tokens created to be destroyed and removed from exchanges.
“SEC registration is not only too expensive for most token creators — there is also no clear path for registering tokens,” Shapiro said, adding:
“What’s the plan here? Since registration is not possible, it can only be [that] everyone pays big fines, stops working on the protocols, destroys all dev premins and deletes [tokens] from trade. That would mean 12,305 lawsuits.”
“What’s the plan? We’re all fooled, and billions of Americans [dollars] is at risk.”
