• Crypto Lawyer John Deaton has highlighted the inconsistencies in the Securities and Exchange Commission’s (SEC) approach toward cryptocurrencies.
• Deaton noted that the SEC is suing Ripple, the issuer of XRP, despite it not fitting the definition of security given in William Hinman’s “Hinman speech”.
• Despite this, Chairman Gary Gensler has repeatedly said that Hinman’s view has nothing to do with the SEC.
The Securities and Exchange Commission (SEC) has recently been taking a more confrontational approach towards digital assets and the issuers of them. This shift in stance has been particularly noticeable under the tenure of Chairman Gary Gensler. John Deaton, a lawyer specializing in digital currencies and the founder of Crypto Law, has now spoken out to highlight the flaws in the SEC’s approach.
Deaton noted that the SEC is suing Ripple, the issuer of XRP, despite it not fitting the definition of security given in William Hinman’s “Hinman speech”. Hinman had argued that a digital asset marketed as an investment to non-users by promoters to develop the enterprise, can be, and most often is, security. However, this view runs counter to the SEC’s whole argument in the case against Ripple. Despite this, Gensler has repeatedly said that Hinman’s view has nothing to do with the SEC.
Deaton also highlighted that the SEC has been fighting digital assets in court, despite having previously issued multiple documents that were clear in their interpretation of digital assets. The most notable of these documents is the SEC’s 2019 Framework, which stated that digital assets can be a security depending on the facts and circumstances. This document has been cited by the SEC in the past, yet now it is seemingly being ignored.
The SEC’s confrontational approach to digital assets has been met with criticism from numerous figures in the cryptocurrency space. Deaton is just one of many that have spoken out against the SEC’s approach, and he believes that the agency should reconsider its stance. He argued that the SEC should be more constructive in its approach and aim to provide the industry with clarity, rather than trying to push its own agenda.
Ultimately, the cryptocurrency industry will be watching the SEC’s actions closely in the coming months. If the SEC continues to pursue a confrontational approach, then it is likely that more lawyers and industry figures will speak out in the future. However, if the SEC chooses to take a more constructive approach, then it could provide much needed clarity for the industry going forward.