SEC Chairman, Gary Gensler, is taking the first opportunity to cause concern in the cryptocurrency industry with his statements and reiterating his position that all cryptocurrency assets are subject to US securities law, except for Bitcoin.
However, one thing is what Gensler and the SEC are saying and another is how all of this is determined by the law.
In this article we will look at Gensler’s views on the one hand and on the other hand what the legal aspect of the whole issue is.
Gensler’s position
Although cryptocurrency assets have not yet been officially categorized, Gensler insists in his public statements to express the view that “everything other than Bitcoin is a movable asset“.
In his opinion, the people behind all cryptocurrency projects and networks are trying to lure investors to buy their coins and tokens:
“There are people behind these cryptocurrencies that use a variety of complex and legally opaque mechanisms, but at the most basic level they are trying to promote their tokens and attract investors. At their core these tokens are floating assets because there is a group of people in the middle and the public expects profits based on the action of that group,” he said.
The lawyers’ view
Attorney and policy officer at the Blockchain Association, Jake Chervinsky, argued that Gensler’s words or opinion do not constitute legislation and that under current law in order for a cryptocurrency to be categorized as a movable asset, the SEC would have to prove its case in court for each individual cryptocurrency.
Specifically, he noted:
“The SEC does not have the authority to regulate any entity until and unless it proves its case in court. That is, on an asset-by-asset basis and one at a time,” Chervinksy explained.
In the same vein was the view expressed by SEC Commissioner Hester Pierce, who urged Congress to speed up the development of legislation and the official classification of cryptocurrency assets.
Until then, regulators like the SEC will take matters into their own hands with these enforcement actions, as they did in several cases through 2023.
“Using enforcement actions to tell people what the law is in an emerging industry is not an effective or fair way to regulate,” Pierce said in response to the SEC’s crackdown on Kraken.
However, until there is a strong regulatory framework for digital assets in the US, the SEC is expected to continue its war on cryptocurrencies, whether it has the authority to do so or not.
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