The US SEC Wants All Cryptocurrencies Under Its Jurisdiction, Except Bitcoin

The U.S. Securities and Exchange Commission (SEC) has turned very much active in the crypto space especially after the collapse of crypto exchange FTX in November 2022.

During his recent interview with New York Magazine, SEC Chair Gary Gensler spoke about the future of crypto regulations. Gensler said that his securities agency has all legal resources to supervise the crypto market.

Over the last few months, the SEC has been cracking down heavily on Web3 and crypto companies by enforcing stringent regulations. However, the US congress has yet to pass a law over crypto legislation.

The SEC Chairman argues that probably all cryptocurrencies, except for Bitcoin, shall fall under the agency’s jurisdictions. He adds that for every other cryptocurrency except for Bitcoin, there’s a website and entrepreneurs running this crypto projects.

Gensler notes that these entrepreneurs set up their entities in tax haven offshore while making it hard jurisdictionally for them to regulate. “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,” said Gensler.

The SEC chair noted that there are people behind these cryptocurrencies that are trying to promote their tokens and entice their investors. He said that these people drop tokens in the overseas market but eventually return to the US at some point in time. “These tokens are securities because there’s a group in the middle and the public is anticipating profits based on that group,” he added.

Genselr compares crypto investors to stock investors who are looking to derive profits based on the efforts of the intermediaries. Legally, such transactions fall under the category of “securities” within the SEC’s jurisdictions.

However, Gensler’s recent comments have been met with criticism from the crypto community recently. Speaking on the matter, Attorney Logan Bollinger stated that Gensler’s views on what constitutes a security are not legally binding.

“Friendly reminder that Gensler’s opinions on what is or isn’t a security are not legally dispositive. In this country, judges - not SEC chairs - ultimately determine what the law means and how it applies. Doesn’t mean his thoughts are irrelevant. They’re just not dispositive,” he wrote.

Another popular crypto lawyer Jake Chervinsky wrote that the SEC lacks authority to regulate digital assets. He added: “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”.