Crypto Twitter Gears Up for a Fight: SEC’s Gensler Dubs ‘Everything Except Bitcoin’ a Security
- SEC Chair Gary Gensler reiterated that all crypto except bitcoin was security.
- This could severely impact the crypto industry. It could make it impossible for retail traders to buy crypto other than bitcoin.
- Crypto advocates believe the move could drive the crypto industry out of the US.
- Advocates are fighting the SEC, urging investors to pressure Congress to rein in the SEC.
Crypto advocates and enthusiasts are gearing up for a fight as the US Securities and Exchange Commission moves in to crack down on the industry.
The stakes are high. SEC’s crackdown could mean that retail investors in the US could not trade any crypto other than bitcoin.
On Thursday, SEC Chair Gary Gensler reiterated that he considers all digital assets except Bitcoin securities. Gensler’s remarks for the New York Magazine drew the ire of crypto Twitter, one of the most active online crypto communities.
The push towards crypto regulation came after the catastrophic collapse of FTX. The exchange’s bankruptcy put pressure on regulators to
Central to Gensler’s argument is that most crypto tokens have founding teams that drive development.
“Everything other than bitcoin, you can find a website, you can find a group of entrepreneurs,” Gensler said. He also indicated that it does not matter where the firms are located or how they are incorporated. The SEC could be coming for them if they sell crypto assets to US inventors.
“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 will take six months before they return to the U.S.,” he continued.
If SEC Takes Hardline Approach, ‘All Tokens Go To $0’
SEC Chair’s comments indicate that the agency is not content with pushing ICOs overseas. Instead, the agency is going after all crypto transactions except those in Bitcoin.
“But at the core, these tokens are securities because there’s a group in the middle, and the public is anticipating profits based on that group,” Genser said.
Bringing crypto under SEC regulation could severely impact the ability of crypto firms to raise funding. If the SEC took a hardline approach, this could mean that retail investors couldn’t buy crypto assets other than bitcoin.
According to US attorney and General Counsel at Delphi Labs Gabriel Shapiro, the SEC could take just that approach.
“So far, SEC has handled tokens in mainly two ways,” he said. “One is a fine plus registration requirement,” which failed every time, he said.
The other one was “a fine plus the order to destroy all pre-mined tokens and delist tokens from all exchanges,” he added. “Both ways, tokens go to $0.”
Exchanges Stand to Lose the Most
Even if the SEC does not move against all crypto assets, a crackdown against crypto exchanges is likely.
In the Thursday interview, the SEC Chair indicated that exchanges offer services “in a way that’s commingled and is rife with conflicts.”
“The conflicts in these storefronts, we do not allow in traditional finance, we don’t allow in the securities markets, we don’t allow it in the commercial banking markets, and we don’t allow it in crypto because these storefronts are fundamentally and generally non-compliant with the securities laws as we know them.”
Earlier this month, the SEC settled a lawsuit against Kraken, prohibiting the exchange from selling staking products.
Crypto Gears to Fight Back
While the SEC stood on the sidelines, the crypto industry grew hundreds of millions in market cap. Thousands of companies and millions of traders became invested in the space.
Crypto influencers, whose livelihood depends on covering altcoin moves and promoting trading platforms, are chief among them. Several of them decided to push back against the SEC and demand favorable legislation from Congress.
“You guys realize Gary Gensler doesn’t have any power at all apart from what Congress ALLOWS him to have, right?” crypto YouTuber Ben Armstrong (BitBoy Crypto) said. “The day of reckoning is coming. The boss is about to call him in.”
Influencers like Armstrong promoted the newly-formed Digital Currency Traders Alliance, an initiative aimed at stopping the “SEC’s attack on crypto,”
“If you are sick of the SEC overstepping their boundaries, join DCTA,” Wendy O, the biggest female crypto YouTuber wrote.
“We are asking Congress to step in and stop the SEC from their predatory practices against bitcoin, crypto, NFTs, and retail,” she added.
‘Stake your Chickens, Yield Eggs, Security’
While the SEC has investors’ protection in mind, the reactions from the crypto community were mostly negative.
Some users said the SEC’s crackdown would delay technological development and push crypto out of the US.
“The SEC can’t kill crypto. All they can do is delay it and push it out of the US,” one Twitter user wrote.
Others ridiculed SEC’s broad approach to crypto securities regulations, including its crackdown on centralized staking services.
“Stake your chickens; Yield eggs; Security,” one Twitter user wrote. Armstrong agreed, arguing that cleaning products are also securities under SEC’s broad definition.
On the other hand, some bitcoin maximalists are celebrating Gensler’s remarks. MicroStrategy CEO Michael Saylor thinks the SEC’s crackdown could benefit Bitcoin.
Bitcoin maximalists were not the only dissenting voices in the crypto space. Some altcoin supporters recognized the need to regulate centralized players in crypto.
“The SEC is right. Crypto is so centralized now that it’s their prerogative to regulate it,” Sasha Ivanov, the founder of Waves Platform, said.
It is unclear whether crypto Twitter can hold back SEC’s regulatory push. The FTX collapse has put strong pressure on politicians and regulators to rein in the excesses in the crypto space.
On the Flipside
- Crypto firms could adapt to the SEC’s new rules by providing full financial disclosures to investors and the public.
- Traditional public companies must provide quarterly financial reports to be listed on stock exchanges.
Why You Should Care
The SEC’s hawkish stance on crypto raises serious concerns for the trillion-dollar crypto industry. If the SEC takes a hardline stance, millions of traders could lose the ability to trade their tokens.
Read more about The SEC’s crackdown on centralized staking services:
Why the SEC’s ‘Staking Ban’ Is Not What You Think
Read more on the SEC’s ‘hot takes’ on crypto:
Emojis Are Financial Advice, Says Former SEC Branch Chief
Read more: https://dailycoin.com/secs-gensler-dubs-everything-except-bitcoin-security/
Text source: DailyCoin.com
