Maria Irene

Jason Gottlieb, a prominent securities lawyer, recently took to Twitter to share his insights on the current stance of the Securities and Exchange Commission (SEC) and its Chair, Gary Gensler, towards cryptocurrencies and digital assets. In a thread that has since gone viral, Gottlieb argues that Gensler and the SEC are failing to see the paradigm shift that digital assets represent.

Gottlieb’s main point is that digital assets are fundamentally different from traditional securities. He notes that every 10-20 years, people create something new and claim it’s not a security. The SEC then steps in, stating that the securities laws are designed to be flexible, covering various investment arrangements. This is where Gensler’s view comes into play, as he sees cryptocurrencies as just another iteration of the same old story.

However, Gottlieb explains that digital assets are indeed different, as they separate the “asset” from the “investment contract.” Crypto tokens are software that can be sold as part of an investment contract but are not the contract itself. This distinction is further discussed in the paper “Ineluctable Modality” by @NYcryptolawyer and team.

Another critical difference lies in disintermediation – securities require two parties, while crypto tokens can be bought without investing in anything or anyone. Moreover, decentralized finance (DeFi) exchanges can run autonomously, without intermediaries. This disintermediation is fundamentally different from traditional exchanges and highlights why the SEC’s proposed exchange rule is misguided.

Gottlieb uses the analogy of cars and horse-buggies to illustrate his point. Had regulators 100 years ago insisted that cars were no different than horse-buggies and enforced existing laws, the American economy would have been hampered, and people endangered. He argues that failing to recognize and adapt to the paradigm shift that digital assets represent will leave the US lagging behind other countries that are updating their laws to accommodate this new reality.

Europe, the UK, and Japan have already begun changing their laws to reflect digital assets’ reality, while even “offshore jurisdictions” like the Cayman Islands and the British Virgin Islands have more advanced Virtual Asset Service Provider regulations than the US.

Gottlieb doesn’t believe Gensler is evil or dumb; he just thinks Gensler fails to recognize that this time, digital assets truly are different. He acknowledges that winning courtroom victories will be challenging, especially in district courts where judges are bound to precedent. However, Gottlieb believes that the quickest way to change the game is through legislation.

He urges people to write and call their Members of Congress, noting that crypto is an apolitical issue, with both Republicans and Democrats supporting and opposing it. Gottlieb also encourages support for groups lobbying for positive change, such as the Blockchain Association, Coin Center, DeFi Defense Fund, Crypto Council for Innovation, and the LeXpunK Army.

Gottlieb acknowledges that no legislation will be perfect, but at least it will provide a path forward. He concludes by saying, “We’d rather have highways, with requirements for seatbelts and airbags, than what we have now, which is ‘be a horse-buggy, or get off the road.'”


Please enter your comment!
Please enter your name here