Unraveling the Common Thread in SEC's Crypto Cases

• Crypto Regulation: A Topic of Discussion Among U.S. Judges and the SEC
• State of Crypto: The Current Scenario
• The Importance of the Matter
• Breaking Down the Situation
• Voicing Concerns
• SEC's Position on Cryptocurrencies
• A Need for Consensus
• Future Implications

Crypto Regulation: A Topic of Discussion Among U.S. Judges and the SEC

Early this week, a question arose during a discussion among attorneys of the U.S. Securities and Exchange Commission (SEC) about the absence of a comprehensive regulation for cryptocurrencies.

State of Crypto: The Current Scenario

The discussion was a part of the State of Crypto newsletter, which delves into the intersectionality of cryptocurrency and government. The central issue at hand is the lack of consensus on how the federal judiciary views crypto. Judges are increasingly questioning the source of such a consensus.

The Importance of the Matter

The validity of the SEC's perspective on the application of securities law to crypto, in the eyes of the federal judiciary, remains uncertain. District court rulings have suggested that the answer is not straightforward. With time, judges are emphasizing the need for something more substantial than mere public statements.

Breaking Down the Situation

In the past week, two judges have questioned attorneys from the SEC and crypto exchanges (Coinbase and Binance) about the federal agency's case against the platforms. The hearings have questioned the SEC's position regarding the regulation of cryptocurrencies and the need for more precise rules.

Voicing Concerns

District Judge Amy Berman Jackson queried the SEC's intentions and their approach towards regulating crypto. She raised questions about the lack of a comprehensive regulation and the current process of dealing with cases on a per-coin basis, which judges find inconsistent.

SEC's Position on Cryptocurrencies

The SEC has maintained a clear view on cryptocurrencies since 2017 and the DAO Report. Both former Chair Jay Clayton and current Chair Gary Gensler view most cryptocurrencies as securities. However, the industry opposes this stance and has argued against most cryptos being deemed securities in multiple lawsuits.

A Need for Consensus

However, despite the ongoing discussions, no definitive determinations have been made by Congress or the federal courts on whether certain cryptos are securities or commodities. This lack of consensus puts an emphasis on the need for change. The situation could change in the upcoming year if an appeals court decides to review the SEC's expected appeal of Judge Analisa Torres' ruling in the agency's case against Ripple.

Future Implications

Congress may pass legislation addressing crypto and redefine the SEC's jurisdiction in the industry. Meanwhile, Judges Jackson and Failla have yet to rule on the motions to dismiss the case. However, these cases generally aren't dismissed at this stage.

Edited by Jonathan Stoker