In an interview published by New York Magazine’s Intelligencer, Gary Gensler, the head of the U.S. Securities and Exchange Commission (SEC), outlined his reasoning for thinking that all crypto tokens other than bitcoin are securities.
The publication reported that Gensler figured the securities watchdog had all the legal resources necessary to regulate the cryptocurrency industry.
The SEC chairman reportedly explained that almost all types of cryptocurrency transactions already fall under its purview, with the exception of spot transactions in bitcoin and the actual purchase or sale of goods or services using cryptocurrencies.
“Everything other than bitcoin … you can find a website, you can find a group of entrepreneurs, they might set up their legal entities in a tax haven offshore, they might have a foundation, they might lawyer it up to try to arbitrage and make it hard jurisdictionally or so forth
They might drop their tokens overseas at first and contend or pretend that it’s going to take six months before they come back to the U.S.”
Gary Gensler, Chairman of the SEC
Gensler remarked that, at the core, the tokens should be considered as securities since there is a group in the middle of the process and the public is depending on said group for profits.
The statement above, however, was met with some disagreements from a number of individuals — including attorney Jake Chervinsky.
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
Chervinsky explained that the SEC does not have the authority to regulate any of the tokens, until and unless it is proven in court. He stressed that this can only be done for each individual tokens, not collectively.
Another lawyer called Logan Bolinger added to that by stating that only the judges get the final say in determining what the law means and the application of it, not the SEC chairs. That being said, Gensler’s opinion was not being dismissed as irrelevant — just not dispositive.
