Gary Gensler Crypto Claims Challenged

Crypto lawyers have rejected cryptocurrency claims made by SEC chair Gary Gensler, who recently stated in an interview that all cryptocurrencies except Bitcoin are securities that fall under its jurisdiction.

In an interview with New York Magazine on 23 February, Gensler stated that "everything other than Bitcoin" falls under the US Securities and Exchange's jurisdiction as a security. He elaborated that crypto projects, besides Bitcoin, are considered securities because they involve a group in the middle, and the public anticipates profits based on that group. However, he noted that this is not the case with Bitcoin.

Crypto attorney's opinion on SEC's regulatory jurisdiction

Lawyer and policy lead at the Blockchain Association, Jake Chervinsky, argued with the comments by Gary Gensler on his authority over the cryptocurrency sector.

He tweeted on 26 February that Gensler's opinion is not legally binding, and the SEC must prove its jurisdiction over each token in court before regulating any of them.

Lawyer Logan Bolinger also supported Chervinsky's view by tweeting that Gensler's opinions on what is or isn't security are not legally conclusive, as the ultimate decision is up to the judges, not the SEC chairs.

Also, Jason Brett, the policy lead at the Bitcoin Policy Institute, tweeted that Gary Gensler's comments "shouldn't be celebrated, but feared" and that there are alternative ways to win than with a "regulatory moat".

Enforcement challenges: Gabriel Shapiro

Gabriel Shapiro, the general counsel at investment firm Delphi Labs, took to Twitter to explain the difficulty the Securities and Exchange Commission would face in enforcing its rule on the cryptocurrency industry.

According to Shapiro, more than 12,305 tokens valued at around $663 billion are considered unregistered securities and thus illegal in the US. Per Chervinsky's comments, the SEC would have to file a lawsuit against each token creator for enforcement.

Shapiro outlined that the SEC has two main ways of handling cryptocurrencies: imposing fines on token creators and requiring registration or by imposing fines and directing that the created tokens be destroyed and delisted from exchanges. However, he noted that SEC registration is too expensive for most token creators, and there is no clear path for token registration.

Shapiro questioned the SEC's plan for the industry, given that registration appears unfeasible, leading to potentially huge fines, work stoppages, destruction of dev premines, and delisting from trading. He concluded that such a plan would require 12,305 lawsuits and put billions of American dollars at risk, leaving everyone wondering about the SEC's plan.