Regulation
Cryptocurrencies should be regulated by the SEC under the Howey test to protect investors and enforce securities laws
WASHINGTON DC-Benjamin Schiffrin, Director of Securities Policy, released the following statement in relation to the new Better Markets program Information sheet AND Relationship“Cryptocurrencies should be regulated by the SEC under the Howey test to protect investors and enforce securities laws”:
“The cryptocurrency industry has fought in every arena available to avoid being regulated by the Securities and Exchange Commission (SEC), which is known to be a tough and effective policeman in the financial industry. For years now, the SEC has aggressively protected investors and markets from predators and scammers in the cryptocurrency industry. In stark contrast, the Commodity Futures Trading Commission (CFTC) has been a champion of cryptocurrencies. This is why the cryptocurrency industry is desperate to have the CFTC as its regulator. In fact, the cryptocurrency industry argues that cryptocurrencies are, and should be regulated like, commodities.
“The problem is that the law is on the SEC’s side. That’s because of the Supreme Court’s landmark case in determining the scope of the federal securities laws: SEC v. J. W. Howey & Co. Howey, which broadly defines what an investment contract is and therefore a security subject to SEC regulation, ensures that the essential protections of the securities laws apply broadly and that the maximum number of investors are effectively protected.
“As shown in our information sheet AND relationshipCourts have consistently applied Howey to reject the argument that purchasing an asset in order to profit from its appreciation in value is the purchase of a commodity, not a security. Under Howey, courts have held that investments in orange groves, Scotch whisky, bovine embryos, earthworms, and rare coins were purchases of securities, not commodities, because the purchasers purchased the assets not to use or consume them but to profit from their investment. The application of Howey to investments in such a diverse group of assets suggests that cryptocurrencies should not be treated differently. Howey has governed the question of whether an investment scheme involves a security for nearly 80 years. The framework that courts have applied to all types of assets over that period is the same one that should be applied to cryptocurrencies.”
You can find the information sheet Here and report Here.
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Better Markets is a nonprofit, nonpartisan, independent organization founded in the wake of the 2008 financial crisis to advance public interest in financial markets, support financial reform on Wall Street, and make our financial system work again for all Americans. Better Markets works with allies, including many in finance, to advance pro-market, pro-business, and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements, and more. To learn more, visit www.bettermarkets.org.