The animus of the entire crypto world is focused on Securities and Exchange Commission (SEC) Chair Gary Gensler. Critics argue that he paints cryptocurrencies with too broad a brush, stifling the industry altogether. Under his leadership, the SEC filed an enforcement action against Coinbase, arguing several top coins are securities largely because their issuance involved capital formation, despite their necessity in operating underlying networks. This has allegedly caused venture capital investment in the U.S. crypto industry to fall compared to the European Union.
Gensler taught a course on blockchain at MIT, demonstrating his understanding of the nuances of digital assets. It is suggested that he is playing dumb to implicitly support the agenda of Massachusetts Senator Elizabeth Warren, who is mobilizing an “anti-crypto army”. Warren has been informally deputized by President Joe Biden’s administration to define crypto policy, and Gensler may be looking for future appointments within the administration.
In response, lawmakers have proposed bills to fire Gensler, such as the “SEC Stabilization Act” by Representatives Warren Davidson and Tom Emmer. The act intends to remove Gensler and restructure the agency to make it less partisan. However, Gensler’s positions may not be entirely wrong under the current law, given the murky nature of the Howey test in the United States.
Meanwhile, the European Union’s Markets in Crypto-Assets (MiCA) legislation acknowledges that utility tokens are not all financial instruments. MiCA prescribes clear and practical requirements for disclosure and behavior that legitimate crypto projects are able to follow. It defines securities based on factors controlled by the issuer, such as the structure of the instrument itself and the way it is marketed. As a result, the EU is able to allow for utility tokens with ease, while the U.S. struggles with defining them.
The only comprehensive solution for the U.S. is new legislation that refines the definition of a security or carves out a separate framework for digital asset issuers and exchanges. Until we see serious efforts towards that, a sword of Damocles will forever hang over the U.S. crypto space, one election or chair away from being cut.
Source: Cointelegraph
