Crypto advocates criticized Gensler for claiming that all cryptos are securities

In response to Gary Gensler’s statements about crypto regulation, crypto attorneys asserted that the SEC lacks the legal authority to oversee the industry.

Attorneys for cryptocurrencies have rejected statements made by the president of the US Securities and Exchange Commission, who said in a recent interview that every cryptocurrency—aside from Bitcoin BTC tickers down $23,417—is a security that is subject to its regulation.

The chairman of the Securities and Exchange Commission (SEC), Gary Gensler, asserted that “anything other than Bitcoin” falls under the agency’s purview in a comprehensive interview with New York Magazine on crypto on February 23.

Other cryptocurrency ventures, he continued, “are securities because there is a group in the middle and the public is anticipating gains based on that group,” in contrast to Bitcoin, he claimed.

In contrast, Gensler’s “opinion is not the law,” according to Jake Chervinsky, a lawyer and policy director at Blockchain Association, a crypto advocacy group, in a tweet on February 26.

The SEC “lacks authority to regulate any of them,” he continued, “unless and unless” it “proves its case in court” for its authority over each individual token “one at a time.”

In response, attorney Logan Bolinger tweeted on February 26 that “Gensler’s judgements on what is or is not a security are not legally dispositive” — i.e., they are not the final legal judgement.

Judges, not SEC chairs, are the ones who finally decide what the law means and how it should be applied.

There are other ways to succeed besides using a regulatory moat, according to Jason Brett, the policy director at advocacy group Bitcoin Policy Institute, who also noted that Gensler’s remarks “shouldn’t be praised, but feared.”

Delphi Labs counsel: SEC needs 12,305 lawsuits.

In the meantime, the general counsel of investment firm Delphi Laboratories, Gabriel Shapiro, described in a series of tweets the seemingly impossible enforcement the SEC would have to carry out on the sector in order to establish its rule.

According to Shapiro’s analysis, Gensler claims that over 12,300 tokens worth around $663 billion are unregistered securities that are prohibited in the United States. As Chervinsky noted, the agency would have to bring a case against each token inventor.

Shapiro stated: “SEC registration is not simply prohibitively expensive for the majority of token creators—there is also no clear method for registration of tokens.”

What’s the strategy here? Since registration is impossible, the only option is for everyone to pay exorbitant fines, stop developing protocols, destroy all development environments, and delist [tokens] from the market. It translates to 12,305 lawsuits.

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