The SEC Crypto Roundtable: A Dreadful Comedy of Errors

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Ah, the SEC Crypto Task Force Roundtable, a veritable feast of missed opportunities served with a side of stale bread! While it was a delightful departure from the previous administration’s rather draconian “regulation by enforcement” approach, one cannot help but notice that it was more concerned with the ghosts of problems past than with the bright, shimmering future of crypto regulation. 🎭

Since the year of our Lord 1946, the question of whether a product is a “security” or a “commodity” has been dictated by the Supreme Court’s rather antiquated decision in SEC v. W.J. Howey Co. It is no wonder that courts have struggled to apply the “Howey” test to digital assets, as it is, after all, a decision about citrus groves—hardly the stuff of modern financial innovation! 🍊

Digital assets, my dear reader, do not fit neatly into the dusty boxes of “security” or “commodity.” They are a new breed altogether! Yet, the distinction is of utmost importance, for the SEC reigns over securities while the CFTC governs the realm of commodities. A veritable soap opera of regulatory jurisdiction! 🎭

Congress, in its infinite wisdom, is contemplating new legislation akin to last year’s FIT21 bill, which promises to cast aside the antiquated Howey test and provide a sharp, clear definition of how digital assets shall be classified. One can only hope they do not trip over their own feet in the process! 🤞

Friday’s roundtable, featuring a veritable who’s who of crypto lawyers and SEC taskforce members, should have been a springboard for innovative ideas. Instead, it devolved into a tedious debate over the four-party Howey Test and philosophical musings on the nature of securities. How thrilling! 🙄

To be fair, some participants, like the illustrious Miles Jennings of a16z, did propose focusing on economic realities rather than the legal entanglements between issuers and investors. However, much of the discourse was spent on everything from Bitcoin’s dubious role in ransomware to the SEC’s latest guidance on meme coins. Truly riveting stuff! 💸

As the SEC and CFTC prepare to share regulatory authority over digital assets, clarity is paramount. The goal should be to create rules that issuers can follow, ensuring compliance regardless of whether their token is deemed a “security” or a “commodity.” A noble pursuit, indeed! 🏛️

While I commend Commissioner Hester Peirce for her initiative in creating the roundtable, it was, alas, a missed opportunity of Shakespearean proportions. She ought to have invited CFTC Acting Chairman Caroline Pham and her team to join the festivities, or at the very least, to observe. The CFTC was mentioned not once, and the crypto industry desperately needs both regulators to dance in harmony! 💃

As Congress forges ahead with its own answers to the quandary of when digital assets are securities, one can only hope that Commissioner Peirce’s next roundtable will be a veritable cornucopia of ideas that will shape the industry for years to come. Fingers crossed! 🤞

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

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2025-03-24 18:34