On October 5, 2021, Securities and Exchange Commission Chairman Gary Gensler addressed the House Financial Services Committee regarding the agency’s role in regulating the cryptocurrency markets. His remarks regarding Congress’ need to fill the regulatory gaps in cryptocurrency markets have been criticized as confusing considering his past statements that most cryptocurrencies are securities and therefore already fall under the SEC’s regulatory scheme. Adding to the uncertainty is his refusal to stake out a clear position as to whether the two biggest cryptocurrencies, Bitcoin and Ethereum, are securities.
The SEC and its state counterparts presently apply
the Howey[1]/Forman[2] tests set down by
the U.S. Supreme Court in analyzing whether cryptocurrencies are “investment
contracts” within federal and state securities laws. This fact extensive
analysis that is applied on a case-by-case basis may lead to different results
from one cryptocurrency to another. Consequently, if faced with an enforcement
action by either the SEC or the States of Missouri, you may wish to consult
with experienced securities enforcement counsel at Cosgrove Law Group.
Author: Brian St. James
Please follow us on Twitter @CosLawGroup, on LinkedIn at Cosgrove Law Group, LLC, and on Facebook at Cosgrove Law Group, LLC.
[1] S.E.C. v. W.J. Howey
Co., 328 U.S. 293, 66 S. Ct. 1100, 90 L.Ed. 1244 (1946) and 293,
[2] United Housing Foundation,
Inc. v. Forman, 421U.S. 837, 95 S. Ct. 2051, 44 L. Ed. 2d 621 (1975)
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