The Crypto Industry's Legal Arguments

The Crypto Industry’s Legal Arguments

Key Insights

• In response to SEC enforcement actions, crypto firms have focused on a few key arguments pushing back against the SEC’s interpretation of existing securities laws.
• The industry argues the cryptoassets underlying SEC actions are not investment contract securities because the tokens do not include a contract or convey a right to a financial interest in the issuer.
• The industry also argues the Major Questions Doctrine bars the SEC’s enforcement actions because the agency lacks the clear congressional authority to regulate cryptoassets.
• Given the novelty of these legal arguments as applied to cryptoassets, it is unclear whether courts will side with the industry or the SEC, and so far, the results have been mixed.
• Until Congress passes legislation clarifying the scope of SEC authority, regulatory uncertainty will likely persist.