Note that the US Securities and Exchange Commission has already managed to create problems for the cryptocurrency industry in 2023. Specifically, in the first half of February, cryptocurrency exchange Kraken was banned from steaming coins for Americans. In addition, the platform was ordered to pay a $30 million fine to avoid a lawsuit.

A few days later, Paxos, the issuer of BUSD Stablecoin, was threatened with a lawsuit. As a result, the company is now unable to issue new coins. And tentatively, such a decision will continue to be relevant.

What will happen to cryptocurrencies because of the SEC?

The SEC chairman’s comments sparked an active reaction from the cryptocurrency community. Many lawyers have already rushed to criticize Gensler’s position and provided arguments against his claims. As a reminder, this is not the first time Gensler himself has hinted at a significant expansion of this regulator’s powers regarding the crypto industry.

A brief summary of the SEC chief’s interview: everything but Bitcoin is a security, many cryptocurrency companies are breaking the law right now, crypto itself has no fundamental value, but there is an “interesting” concept behind blockchain technology.

The viewpoint of the chairman of this regulator, after years of criticism from various areas of the crypto industry, has become too radical. However, Blockchain Association legal counsel Jake Czerwinski believes that Gensler’s comments cannot be called the ultimate truth. Here’s his quote to that effect.

Chairman Gensler may have prejudged that every digital asset other than Bitcoin is a security, but his opinion is not the law. The US Securities and Exchange Commission has no authority to regulate crypto until its representatives prove their case in court. For each asset individually, one at a time.


That is, the expert makes it clear that the head of the Commission will not suddenly recognise all crypto as securities. First, he has no authority to do so. Secondly, such a position would have to be explained in court, which may not agree with the regulator's approach. A case in point here is the SEC's case against Ripple, the issuer of the XRP token. The claim of an alleged "unregistered offering of $1.3 billion in securities" was filed back in December 2020, but since then it has come to nothing.

With that in mind, will the Commission be able to prove its position on thousands of other assets? Unlikely. However, the regulator could bet on cryptocurrency exchanges, which it would force to get rid of certain coins with purportedly securities features. Gensler can also count on the fact that certain blockchain companies won't have the money to represent themselves in court, so they will prefer to shut down rather than go to the courtroom.


There are thousands of active cryptocurrencies in the industry today, hundreds of which have notable capitalisation in the tens of millions of dollars. Czerwinski hinted that for each of these projects, the Securities Commission would have to assert its authority in court. This is a time-consuming process, and the regulator is unlikely to go that far, if such a thing can be legally implemented at all.

Gabriel Shapiro, general counsel at investment firm Delphi Labs, confirmed that the Commission would have to file more than 12,000 separate lawsuits against all altcoins. Their capitalisation exceeds the $660 billion bar – it is unlikely to be possible to fully establish control over each project.

Another lawyer, Logan Bolinger, shares Czerwinski’s view. Here is his quote.

Mind you, Gensler’s opinion on what is or is not a security has no legal force. In this country, judges, not SEC presidents, ultimately determine what the law means and how it is applied. This is not to say that Gary’s opinion is irrelevant. It’s just that it is not legally backed up.

According to Cointelegraph’s sources, the Commission could in theory go two ways: demand either a fine and obligation to register the project, or a fine and an instruction to destroy pre-mined tokens along with delisting from all exchanges. And both paths are impossible to implement in practice, as the regulator has not even presented a registration process for hypothetical crypto-project securities.

The news of Gary Gensler’s comment has become a source of controversy in the cryptocurrency community. The fact is that MicroStrategy’s Michael Saylor, who loves Bitcoin and kind of has to support the ideals of decentralization with this in mind, supported such a position. But Mike doesn’t care about that: he’s still ready to make his favourite coin a success by creating problems for alternative cryptocurrencies from the regulator.

Here’s his quote from Twitter.

A consensus is emerging that all crypto-industries except Bitcoin are securities. Accordingly, they should be regulated by the Securities Commission. This makes BTC the only crypto-asset suitable for the role of global money.

Such a stance is comical. Firstly, by doing so, Sailor confirms that he fears "competition" from other cryptocurrencies, so he is willing to pit regulators against them. Secondly, Michael got involved with coins clearly not for the ideals of decentralisation and independence from governments, but for the money. It also sounds ridiculous because the Bitcoin network can only handle 6-7 transactions per second, and that's definitely not enough to function as global money. However, Seylor doesn't care about user convenience: he just wants the rest of us to buy the same coin his team has in its portfolio.

A well-known investor under the nickname DCinvestor.eth has responded to what is happening. He has 225,000 followers on Twitter.

Celebrating the government’s attempt to go beyond its remit says a bit about what’s going on? Remember that when one unelected official says that an asset is bad, he may one day change his mind and say that your asset is also bad. By the way, have you paid your taxes in Washington yet?

Here's a mention of the story of how Michael Saylor was sued for possible tax evasion. Read more about the story in a separate article.

Here’s another apt quote about the Saylor situation.

The irony of Bitcoin – the community believes that government intervention is the key to its success.


The bottom line so far is that Gary Gensler's point of view means nothing. And even if the US Securities and Exchange Commission decides to ban everything around it for some reason, it will have to prove such a position in court. On top of that, Gensler could also lose his position - especially given his close association with FTX crypto-exchange founder Sam Bankman-Fried.

In the worst-case scenario, entrepreneurs would leave the US market for jurisdictions with more adequate regulation. Users would be left to use decentralised exchanges, which could also be trending in this scenario.