The US Securities and Exchange Commission (SEC) has recently increased its enforcement actions against the crypto industry. The chairman, Gary Gensler, is leading the charge against the new asset class.
As US regulators tighten their policies against various crypto exchange services in their jurisdictions, it has created a wave of concern and fear among investors and customers of exchange platforms.
The SEC-Crypto Divide Continues to Grow
On February 23, SEC Chairman Gary Gensler stated in interview with New York Magazine (NYMAG) that “everything other than Bitcoin” is a security in the US Jurisdiction according to Howey’s test rule.
This follows a consistent policy towards tokens that support various services for US customers of the exchange, such as staking services. Bitcoin is an exception, according to Gensler, given its “unique history and creation story, which is fundamentally different from other crypto projects.” The SEC chairman added:
They can put the token overseas at first and argue or pretend that it will take six months before returning to the US But in essence, these tokens are securities because there is a group in the middle and the public has anticipated profits based on the group.
Gabriel Shapiro, General Counsel at Delphi Labs, who has more than ten years of experience in structuring, negotiating, and executing strategic transactions for clients in the technology sector, addressed the SEC Chairman’s statement in a post on Twitter. Shapiro highlighted the importance of tokens other than Bitcoin, which have different applications and services in the financial sector.
Shapiro took the hypothesis of the Chairman of the SEC and concluded that with a total crypto market cap of $ 1.13 trillion, it consists of 12,306 tokens in the crypto industry, where Bitcoin accounts for a share of $ 467 billion, 40% of the total market cap, 12,305 tokens. allegedly operating illegally in the US because they are publicly traded as “unregistered securities.”
For Shapiro, the SEC has failed in its handling of tokens, which are classified in two main ways:
(1) search + registration requirements-this has failed every time so far, with the company going bankrupt
(2) search + to destroy all premined tokens and delist tokens from all exchanges
both ways, the token goes to $0
Additionally, Shapiro believes that SEC registration is expensive for most token creators, coupled with an unclear path to token registration. Shapiro believes this framework and the Howey test rules mean 12,305 lawsuits and “eliminate” $663 billion from the market.
Since registration is not “eligible,” according to Shapiro, each token creator must pay a hefty fine to register their token. This could lead to the cessation of token development and further delisting from crypto exchanges.
Concerns about the SEC’s approach to the industry have now affected stablecoins and the services that exchanges provide in US jurisdictions. This could cause capital to flee the shores of the American nation. Meanwhile, without a clear regulatory path for investors, questions and uncertainty will continue to accumulate in the crypto industry.
The total market capitalization of the crypto industry is currently at $1.02 trillion, which represents a change of -1.39% in the last 24 hours and a change of -37 $ a year ago. At press time, the Bitcoin market cap is at $450 billion, representing a dominance of 40.25%.
On the other hand, the market cap of stablecoins is at $136 billion and has a share of 12.18% of the global market cap of the crypto ecosystem, according to CoinGecko data.
Feature image from Unsplash, chart from TradingView.