SEC boss Gary Genler: Everything except Bitcoin is a security
SEC boss Gary Gensler. Image from the SEC website, license: community-free.
The leading stock exchange supervisor of the USA, Gary Gensler, explains to New York Magazine why he thinks that all cryptocurrencies except Bitcoin are securities – and have to be regulated as such. But what follows from it?
It should rarely happen that the liberal Bitcoin scene cheers themselves when supervisors present themselves as hard dogs. But an interview by SEC boss Gary Gensler in the New Yorker triggers hardly any cautious enthusiasm.
This is how the Podcaster Niko Jilch is confirmed that everything except Bitcoin is “toxic garbage”. He cheers, “the US authorities come. Take cover.“As one of his followers that the EU see it more loosely, he replies that the United States did it“ a lot.
SEC Chef Gary Gensler: Everything except #bitcoin is a security – an illegal security. That’s why I’ve been drumming against “Altcoins” for years.
If it is not #bitcoin, it’s toxic garbage. The US authorities come. Take cover.https: // t.Co/n36molz6f3
– Niko Jilch ⚡️ (@nikojilch) February 26, 2023
But what really said Gensler? And what does it mean for the market?
The debate is about an interview that the SEC boss gave the New Yorker. In it Gensler gives insights into how he thinks about the cryptom market and the financial regulating disease itself. For example, he does not recognize what the point of crypto is and finds the release of tokenization dangerous: “We live in a world in which Amazon shares and US state bonds are already digital. You can literally take the $ 24-Billion market, put it on a blockchain and withdraw it to the current regime of federal regulation.”
One ideal, the other nightmare. Gensler’s role is the one who tries to press the spirit back into the bottle that he has long since escaped. He tries to extinguish all the campfires after Prometheus gave people fire.
For this, says the SEC boss, no new laws are needed. The existing ones already give him the mandate to take hard in the cryptom market. He is convinced, writes the “New Yorker”, that “more or less any kind of crypto transaction is already under the jurisdiction of the second”. The only except for the spot trade with Bitcoin and the purchase or sale of goods with cryptocurrencies are.
Then Gensler provides the quote that some Bitcoin maximalists so delighted: “Everything except Bitcoin”. For everything except Bitcoin, “you can find a website, a group of internal attendants who may have put on a legal entity in a tax paradise;.“The editors of the tokens take many detours and invent many stories. “But basically these tokens are securities, because there is a group in the middle and the public expects profits based on this group.”
Bitcoin alone, because of its unique history, is fundamentally different.
Does this mean that everything in the USA is prohibited apart from Bitcoin? That the SEC will follow all other cryptocurrencies and tokens? The supervision will sue every stock exchange that offers more than Bitcoin? Every foundation and every ecosystem will have to register its tokens at the Sec? A gigantic wave of lawsuits will roll over the cryptom market in the USA?
What is the plan?
Under the Gensler regimia, the SEC could actually try to enforce this claim. However, blockchain lawyer Jake Chervinsky makes Gensler’s view “an opinion, no law”. “The SEC does not have the authority to regulate one of them [from the digital assets] before proving the claim in court. For every asset, every single time, one after the other.”
Chair Gensler May have prejuded 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, Individual Aly, One at A Time.
– Jake Chervinsky (@jchervinsky) February 26, 2023
Gabriel Shapiro, also a crypto lawyer as Lex Node, therefore asks “What is the plan?“According to Gensler’s statement, he explains,“ 12.305 token / $ 663 billion in value in the United States because they are traded as unregistered securities.”
Now that Gensler Has Made Clear He Regards Every Single token (Including StableCoins) Other Than Btc as Securities Under U.S. Law, Can We Start Asking “What is the plan here?”
Some Thoughts & Facts Below: Pic.twitter.com/zpkudkdct4sc
– _gabrielshapir0 (@lex_node) February 26, 2023
So far, the SEC has acted in two ways against such unregistered securities: firstly, it imposes a punishment and demands registration as security. So far, this has failed in every single case, whereupon the companies involved went bankrupt. The second variant is also a punishment and the arrangement to destroy all premined tokens and to remove the tokens itself from stock exchanges. “In both cases,” says Shapiro, “the tokens fall to $ 0.”
Registration with the Sec as security is not only too expensive for most token creators-“There is also no clear path (no matter how often Gensler claims the opposite).“Registration is more or less impossible. The SEC’s plan is therefore that “every huge punishment pays, stops working on the protocols, destroys all premines and the tokens delistet.“This would 12.305 judicial processes and the extinction of $ 663 billion.
12.000 court processes – that is more than there are registered securities at the Sec. And if a foundation or a company or community of interests defends itself, every single process can extend. You can see that at Ripple, a coin that, like no other, corresponds to security or security, but still involved the SEC into a long process. The supervision would block the US courts for years.
All of this may be a pleasant way for the seconds: the authority has food to conduct legal processes until the Saint Nimmer Day, and in view of the high levels involved, it can move into many billions in terms. Gensler’s step could initiate a massive redistribution of values from the free market to a state institution, it would be almost the collectivization of the cryptom market. For this, the extreme would have consequences, especially in the USA, but also worldwide.
But the word of a second boss is not a law, and the mills of the judiciary are known to grind slowly. Therefore there are no reasons for the crypto scene to panic.