By Marcus Sotiriou, Market Analyst at the publicly listed digital asset broker GlobalBlock (TSXV:BLOK).
Bitcoin dropped below $23,000 over the weekend, after SEC Chairman Gary Gensler’s opinion on which tokens are securities within digital asset trading was made clear. He told the New York Magazine, “Everything other than bitcoin. You can find a website, you can find a group of entrepreneurs, they might set up their legal entities in a tax haven offshore, they might have a foundation, they might lawyer it up to try to arbitrage and make it hard jurisdictionally or so forth.” This infers that even though crypto founders might be using various legal methods to protect themselves, they still fall within securities laws.
If we look at the total number of tokens that Gensler seems to think need to be registered with the SEC within the digital asset trading market, it becomes larger than the entirety of all SEC-registered public companies, which is over 9,000.
I think we need to ask what is the SEC’s capacity to prosecute digital asset trading companies. If they were able to prosecute less than 500 companies, they will probably be losing ground relative to new tokens being created. Then, you have to prioritise prosecuting certain companies over others – how can do you determine this? Ultimately, Gensler’s opinion is not the law, and every case the SEC brings up has to be proven in court. The longer this uncertainty is in limbo though, the worse it is for the whole industry.