For the past decade, cryptocurrency companies have found themselves squarely in the crosshairs of litigation initiated by the Securities Exchange Commission (SEC).1 The question that is currently dominating the courtroom in this arena is whether the sale of a company’s key digital assets, commonly referred to as “cryptocurrency” or "crypto," constitutes the sale of securities under federal law.2 Tasked with overseeing the securities market, the SEC seeks to ensure safe and fair participation in federal securities exchanges.3 With recent scandals and accusations of fraud plaguing major players in the industry, the SEC is now taking a firmer regulatory stance than it had in the past.4 Today, circuit splits concerning the applicable regulatory framework and the appropriate definition of “securities” continue to fuel the fire of this contentious debate.5
In addition to massive lawsuits brought against cryptocurrency companies, recent legislative proposals aim to curb the risks plaguing the industry which stem from unregistered and unregulated transactions involving cryptocurrency. For example, Senators Elizabeth Warren and Roger Marshall proposed the 2023 Digital Asset Anti-Money Laundering Act (DAAMLA), where the resolution seeks to impose regulatory restrictions amongst certain actors in crypto transactions.6 DAAMLA is one of many legislative efforts that is currently attacked by opponents who claim that the legislation unfairly targets the crypto community and “risks [the] nation’s strategic advantage, threatens tens of thousands of U.S. jobs, and bears little effect on the illicit actors it targets.”7 Other proposed legislation, such as the Clarity for Payment Stablecoins Act of 2023, faces its own hurdles as it attempts to pass into law.8
Some of the major companies dominating the cryptocurrency industry have a noticeable impact and offer significant utility to society within the United States and abroad.9 As domestic and foreign entities continue to invest in the technologies and assets provided by these companies, the cryptocurrency industry is becoming increasingly integrated with institutions insured by the Federal Deposit Insurance Corporation (FDIC).10 This foreshadows the fact that these digital assets could become increasingly utilized by not only institutional players, but also lay investors as the industry matures.11 It is clear that market trends support the consensus that crypto is here to stay.12
The cryptocurrency industry as a whole is one rife with potential for institutions and individuals, and I argue that a lack of a clearly defined regulatory framework coupled with recent judicial decisions commands more particularized legislation and guidance from regulators. This article begins first with by providing a broad overview of the cryptocurrency industry and its landscape as of late May of 2024. Second, I will discuss recent court decisions involving SEC enforcement actions taken against cryptocurrency companies and analyze perceived gaps in the current regulatory framework surrounding the industry. The remainder of the article will discuss recommendations for future legislation to address the rapidly evolving financial sector as it pertains to these digital assets.
II. A Background of Cryptocurrency
The cryptocurrency industry existed long before popular companies like Bitcoin exploded in financial markets.13 Since then, crypto has solidified its presence and power in our ever-advancing technological society.14 However, cryptocurrency is still not a clear, statutorily defined concept – rather, it functions as a fluid concept with regulatory restrictions from various government agencies.15 This article will focus primarily on cryptocurrency in the context of the sale of securities and some of the recent debates surrounding recent commonly proposed investment vehicles.16
A. What is Cryptocurrency, and How Does it Work?
In simplest terms, cryptocurrency is a type of decentralized virtual currency that can be exchanged digitally and directly over the internet.17 Cryptocurrency utilizes blockchain technology, a kind of digital ledger akin to “Google Spreadsheets,” which aims to provide transparency and prevent errors and corruption in the validation of transactions.18 As one of the most notorious and widely utilized applications of blockchain technology, cryptocurrency is a multifaceted and global instrument that can vary in behavior.19 As previously stated, cryptocurrency’s variable identity is the crux of the current regulatory issues in courts because the classification of a cryptocurrency as a security, commodity, or neither, determines which regulatory agency controls: the SEC or the Commodity Futures Trading Commission (CFTC).20
As a commodity, cryptocurrency acts similarly to a fiat currency in that it can be exchanged for goods and services anywhere that it is accepted as a legitimate form of payment.21 Companies like Bitcoin have created a network of institutions and exchanges that allow for the conversion of virtual currency into fiat currency.22 Once converted, the utility of the digital asset is readily apparent and may be used to effectuate transactions quickly and efficiently.23 However, unlike fiat currency, cryptocurrency as a commodity does not derive its value from other assets, nor does it depend on a centralized banking system.24 While cryptocurrency as a commodity is primarily regulated by the CFTC, a question of what regulatory framework is applicable may still exist as the characteristics of crypto allow it to fluidly operate not only as a currency but also as a security.
When operating as a security, cryptocurrency is sold and issued to buyers in the form of digital “tokens.”25 Similar to the capital raising efforts of an Initial Public Offering (IPO), buyers can fundraise these “tokens” in a scheme known as an Initial Coin Offering (ICO).26 The structural and operational parallels between an ICO and an IPO are a significant reason why the sale of cryptocurrency operates in a jurisdictional gray area.27 While the sale of digital assets like Bitcoin may not be viewed as one implicating federal securities law, many popular and seemingly identical virtual currency regimes such as Telegram, LBRY, and Bittrex have been deemed securities by the authority of the SEC and fall within its scope.28 This creates confusion as all the aforementioned digital assets share the same characteristics and operate in similar manners.29 Unlike Bitcoin, transactions involving these virtual currencies satisfy the SEC’s test for what constitutes security, which is discussed in length below.30
B. The Current State of the Cryptocurrency Industry
Due to the increased popularity of digital tokens like Bitcoin and continuous technological innovation in exchanges of digital assets, the lines guiding how to define and treat cryptocurrency have become blurred.31 The current cryptocurrency markets are subjected to the incomprehensive and contrasting regulatory schemes of both the CFTC and SEC, among other regulatory agencies, and this is where much of the resulting confusion and debate surrounding the industry lies.32 Currently, several major agencies and various pieces of legislation are seeking to reign in the growing confusion associated with this novel and expansive industry.33
The crypto industry continues to experience scandals and fraud that have led to the SEC bringing more enforcement actions.34 For example, in late 2022, the industry faced the nightmarish mismanagement of $8 billion in cryptocurrency from the collapse of Sam Bankman Freid’s FTX.35 Yet, despite massive fraudulent schemes and resistance from certain regulators to allow the growth of the cryptocurrency industry, there is significant positive societal impact from this industry.36
Even in the wake of FTX’s demise, the industry appears prepared to move forward with plans for growth.37 As of April of 2024, Bitcoin soared to a valuation as high as $70,000, sparking optimistic views amongst its investors.38 Recent litigation by the SEC is underway with multi-billion-dollar institutions like Ripple Labs and Grayscale.39 While Grayscale’s ruling has been decided, Ripple’s fate remains to be seen as talks of settlement continue after Ripple Labs was ordered to pay the SEC about $125 million in penalties.40 These contentious disputes have produced varied guidance of whether certain sales involving digital assets should be subjected to the SEC’s purview.41 In the ongoing lawsuit, the U.S. District Court has issued somewhat complex rulings claiming some of the transactions by the company to be securities, and yet under the same framework, some appear to be outside the scope of the SEC’s authority.42 Other litigation, such as the SEC’s enforcement action against crypto exchange Coinbase initiatated in June 2023, have yet to be resolved.43
III. Cryptocurrency in the Courtroom
The current regulatory framework surrounding cryptocurrency in the United States involves a multi-dimensional relationship between the SEC, the CFTC, and other federal agencies.44 The most recent SEC case law shows a strict adherence to the Supreme Court’s holding in SEC v. W. J. Howey Co., in which the Court determined what qualifies as a security, otherwise termed an “investment contract.”45 In making this determination, the Court created and utilized the now well-known Howey test, the application of which has recently been the subject of constant courtroom debate.46
A. Applying Howey to Crypto
Section 5 of the Securities Exchange Act of 1934 makes the unregistered sale of any security within an exchange unlawful.47 However, neither the Securities Exchange Act nor its predecessor, the Securities Act of 1933, offers a concise definition of a security; instead, the statutes provide lists of items that are securities, including a catch-all category for “investment contracts.”48 Lacking a statutory definition of an “investment contract,” the SEC relies on the Supreme Court’s analysis and holding in SEC v. W. J. Howey Co. to determine whether an asset is an “investment contract” within the scope of the Securities Act.49
The landmark 1964 case, involving multiple sales of tracts of land used for farming orange groves, tasked the Court with determining whether the transactions at question constituted sales of “investment contracts.”50 Answering in the affirmative, the Court ruled that an investment contract exists in a transaction or scheme involving: (1) an investment of money; (2) in a common enterprise; (3) with the expectation of profit to be derived from the managerial or entrepreneurial efforts of others.51 The Court held that if all three prongs of the Howey test are satisfied, “it is immaterial whether the enterprise is speculative or non-speculative or whether there is a sale of property with or without intrinsic value.”52 With the notions of flexibility and foresight built into it, the Howey test remains the dominant test for classifying securities involved in SEC enforcement actions.53
It is crucial to note that the Court found the tracts of orange groves to qualify as a sale of securities because, when analyzing the transaction and not the individual asset itself, the sales satisfied each of the three prongs of the Howey analysis. Just as the orange groves in Howey themselves did not represent securities, neither does a coin sold by a crypto issuer.54 The central point in determining whether a transaction involves the sale of securities is an analysis of how the asset is sold and what the expectations of its purchasers are.55 The Howey Court reasoned that “an investment contract is necessarily missing where the enterprise is not speculative or promotional in character and where the tangible interest which is sold has intrinsic value independent of the success of the enterprise as a whole.”56 Therefore, the examination must focus on the underlying transaction of an asset rather than the asset itself.57 Thus, contrary to many arguments launched by certain crypto advocates, the characteristics of the asset itself are irrelevant to the analysis.58
B. Grayscale and Ripple Labs – A Shift in the Judiciary
The D.C. Circuit’s August 2023 ruling involving the crypto asset manager, Grayscale, is one of many rulings that could signal a shift to more favorable attitudes from the judiciary involving cryptocurrency.59 Grayscale did not involve the application of Howey, but rather is significant because of how the SEC couched its rationale for denying the company’s proposed ETP.60 On appeal, the company challenged an order denying a proposal to the SEC for a would-be bitcoin ETP.61 Before the Grayscale ruling, the SEC rejected every proposal made by the crypto company to list Bitcoin investment products on national exchanges.62 Following these denials, the SEC explained that the products had not adequately been “designed to prevent fraudulent and manipulative acts and practices” as required by the Securities Exchange Act.63 The SEC stated that the protections inherent to Bitcoin and similar cryptocurrencies – blockchain, the size and liquidity of the crypto market, and encryption methods – are inadequate to meet the requirements imposed by the Securities Exchange Act.64 Before Grayscale’s appeal, the SEC claimed that a surveillance-sharing agreement was required for proposals of spot bitcoin ETPs along with a certain regulated market of a significant size.65
The D.C. Circuit, siding with Grayscale, stated that the denial of company’s proposed ETP was “arbitrary and capricious” because the SEC failed to elaborate its reasoning for the denial adequately.66 This ruling is significant for two reasons. First, the Circuit Court found that the SEC failed to adequately provide its reasoning for approving certain bitcoin ETPs while denying the proposal for Grayscale. This finding alone could result in stricter scrutiny for the kinds of enforcement actions the SEC may appeal.67 Unsurprisingly, this finding comes as many lawsuits aimed at federal regulators seek to reign in the broad jurisdiction conferred to these authorities from a constitutional basis.68 Second, the court held that Grayscale's proposed ETP was “materially similar, across relevant regulatory factors, to the approved bitcoin futures ETPs.”69 These holdings indicate the more favorable view of cryptocurrency amongst the courts, which could have many different implications for different financial markets and evidences the fact that the SEC continues to bring aggressive action against cryptocurrency players with no clearly defined rationale. These points are further illuminated in the ongoing litigation the regulator grapples with Ripple Labs, discussed in length below.
Prior to the Grayscale decision, the SEC attempted to set forth guidance, however, varied court rulings only further complicated matters.70 In 2017, the SEC issued one of its first instances of formal guidance regarding the sale of cryptocurrency assets.71 In this investigative report, the SEC cautioned market participants that the offer and sales of digital assets in ICOs and “Token Sales,” among other transactions, constituted the sale of securities.72 Since then, the SEC has been no stranger to courtroom battles with the cryptocurrency community, and its enforcement actions involving securities offerings now constitute the bulk of its actions.73 In light of numerous recent rulings, there seems to be a lack of clarity regarding when the SEC will bring a cause of action against the sale of certain cryptocurrencies.74
Between 2018 and 2023, the SEC disapproved over twenty exchange rule filings for spot bitcoin ETPs.75 After the SEC failed to adequately explain the reason for disapproving Grayscale’s spot bitcoin ETP, it quickly issued a statement announcing its approval of spot bitcoin ETPs.76 To make matters worse, in the same year, the SEC filed a formal complaint against a digital asset exchange Coinbase , alleging that it had failed to adequately register the offer and sales of its transactions with the regulatory agency.77 This lack of clarity surrounding the motivation to bring enforcement actions leads to confusion within the financial community, which ultimately only further negatively impacts the investor marketplace and investors who seek to engage with these companies. The Grayscale holding only adds to confusion in the face of the lawsuit the regulator faces with crypto company Ripple Labs, Inc., and the effects continue to be borne by lay investors.
In 2020, the SEC initiated an enforcement action against Ripple Labs, a San Francisco-based cryptocurrency exchange platform, alleging that Ripple Labs’ sale of its digital token, “XRP,” constituted an unregistered sale of securities. In response, Ripple Labs argued that it did not have to register XRP because XRP is not an investment contract and, therefore, is not a security under the Securities Act.78 On July 13, 2023, the U.S. District Court for the Southern District of New York issued a split decision, granting in part, and denying in part the motions proposed by both parties.79 The decision outlined four distinct types of transactions that involved the sale of the defendant’s XRP.80 The court examined the transactions involving XRP where: (1) sales of XRP were made directly to institutional investors (“Institutional Sales”); (2) algorithmic sales of XRP on digital asset trading platforms (“Programmatic Sales”); (3) XRP sales and distributions as compensation to Ripple employees and third parties (“Other Distributions”); and (4) sales of XRP by executives Brad Garlinghouse and Chris Larsen through digital asset trading platforms.81 In an opinion that has been touted as a substantial victory for Ripple Labs and the crypto community as a whole, Judge Analisa Torres explained that only Ripple’s “Institutional Sales” constituted a sale of securities.82
Applying the Howey test to its legal analysis, the court explained in significant detail why sales to institutional investors constitute securities while the other transactions do not.83 Addressing the “Programmatic Sales,” the court opined that, unlike the purchasers involved in “Institutional Sales,” market purchasers involved in “Programmatic Sales” did not know who or what they were paying money to for the sales of the XRP.84 Rather, the court reasoned that buyers then did not derive the expectation of their profits from Ripple’s efforts, but from other factors like general market influences.85 The court held that such mere, speculative motive involved in the blind bid/ask transactions in the sale of XRP did not, in and of itself, evidence an investment contract.86 Therefore, these “Programmatic Sales” failed to meet the third prong of the Howey test, since investors were not reliant on the efforts of a third party.87 With this same rationale, the court found the transactions involving the Other Distributions could not constitute securities.88
The outcome of Ripple Labs is important for two reasons. First, the decision is the first of its kind where a federal court has declined to rule that the sale of digital assets constituted a securities offering, suggesting that courts may be inclined to side more favorably with cryptocurrency companies in the uptick of SEC actions against them.89 In addition, the Ripple Labs decision represents a judicial confirmation that the Howey test remains the appropriate test to use when determining whether an asset, digital or otherwise, is a security.90 The court explicitly rejected the SEC’s argument that an “essential ingredients” test be applied alongside the Howey test, reasoning that the additional requirements “would call for the [c]ourt to read beyond the plain words of Howey.”91 Contrary to arguments made by some parties in the crypto industry, the analysis for determining whether digital assets are securities must begin with the underlying transaction involved.92 The current regulatory framework imposed by the SEC should remain, however, more explicit guidance on the framework as it applies to cryptocurrency is required.93
IV. Looking Forward
The recent rulings of Grayscale and Ripple Labs signal that the SEC has become more accepting of digital assets allowing them to participate in investor markets unlike in years past.94 While the recent rulings are a light of hope for crypto advocates, the lack of guidance and arbitrary enforcement by the SEC is still cumbersome and creates additional problems. Cryptocurrency is an industry ripe with issues and it remains a priority of enforcement for the SEC.95
A. Recommendations for Existing Regulatory Framework
The SEC’s appetite for cryptocurrency continues to grow, however, a shift in attitudes in the courts signals a desire to reign in the expanding power of the regulatory agency.96 Other recent decisions by the Supreme Court, such as Lorenzo v. SEC, have swallowed prior precedent, significantly expanded the agency’s powers, and serve as warning signs that demand a reexamination of the issues confronting the SEC, specifically enforcement actions involving cryptocurrency.97 SEC leadership has noted the gray area plaguing crypto markets and while no formal guidance has been offered, some insight by former SEC officers could provide an appropriate launching pad for a more effective regulatory scheme.98
In 2018, William Hinman, the previous Director of the Division of Corporation Finance at the SEC, provided insight into the difficult problem of classifying cryptocurrency and his argument remains relevant.99 In his discussion, Hinman focuses on the framework of Howey, as applied to the novelty of the cryptocurrency industry.100 Hinman notes particularly that when applying Howey to cryptocurrency, the focus should not be so much on the labels applied to the instrument in question for the particular transaction, but rather the transaction itself. To exemplify, Hinman looks to the Second Circuit’s holding in Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., where the court held that a certificate of deposit does not invariably fall outside the scope of a “security” because of its involvement in the entirety of the transaction.101 So too here, repeating Hinman’s insight, digital assets fall directly in line where the precedent of Howey is analyzed against the Gary Plastic holding.102 Cryptocurrency, regardless of its label, is merely a digital asset involving its own regime and code.103 By itself, it is no different from another digital asset that one can purchase and use.104 However, when the efforts of promoters to further the sales are added into the transaction, a different type of transaction develops where users and non-users may invest and capitalize on future gains.105 In instances such as those that Hinman discusses, it is therefore logical to treat cryptocurrency as a security against the backdrop of Howey.106
The inverse of this is equally true. Hinman clarifies that when the digital asset in question is no longer sufficiently promoted by a third party, and when these efforts are no longer the basis for its success or failure, it may cease to fall within the category of “securities.”107 Hinman explains, in a nutshell, that cryptocurrency can operate as a commodity or as a security, the point being there can be nuances in how the asset is treated. He also provides a list of non-exhaustive factors to consider when analyzing if a transaction is an investment contract. Hinman’s factors provide guiding inquiries, such as whether a third party exists to control the promotive efforts of an asset or whether a certain amount of funds have already been raised to establish a functional network, that may assist the Howey test.108
In addition to those factors noted by Hinman in his speech, regulators can provide clarity through more comprehensive regulations unique to the crypto industry.109 Decades before crypto arose to fame, technology and innovation of “e-commerce” prompted the legislative efforts that led to the passing of Framework for Global Electronic Commerce.110 Now nearly three decades later the revolutionary new ideas of cryptocurrency and its many forms calls for similar guidance. Guidance advising specific rules for sales involving specific coins and certain crypto funds could provide clarity and safer markets as investors remain eager to become involved in cryptocurrency.111
Even with the recent approval of a spot bitcoin ETP this year, the SEC seems to remain reluctant to open the door completely for more.112 In a release following the approval of this first spot bitcoin ETP, Chair Gensler did not withhold his resentments for the industry, stating that “the underlying assets in the metals ETPs have consumer and industrial uses, while in contrast, Bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity.”113 If there is an expectation that cryptocurrency will operate safely and effectively within other industries in the marketplace, this attitude must change.114 Even within the SEC, divisive opinions only further add to the confusion surrounding the cryptocurrency industry and dissuade the public investor pool from participating in profitable and beneficial areas of the market.115
Echoing some of the themes articulated by Commissioner Peirce in her 2022 speech on regulatory transparency, to facilitate future and further participation by cryptocurrency companies in the marketplace, the SEC must stop arbitrarily denying spot crypto exchanges.116 Grayscale’s recent successful appeal at the D.C. Circuit evidences the importance of this claim.117 Current applicants wishing to list an ETP on the exchange must demonstrate that safeguards are placed to “prevent fraudulent and manipulative acts and practices,” that are implemented “to protect investors and the public interest.”118 The importance of such safeguards are critical and should become increasingly important as new ETPs are approved.119 Dismissing the requirements for more spot bitcoin ETFs or allowing for less scrutiny and prudence to be exercised by companies wishing to be listed on public exchanges only puts the public at risk by foregoing protection for investors.120 However, to achieve a balance between investor participation in the marketplace, and a safe environment for exchanges and listed funds or companies, the SEC must be clearer on why and when they deny these spot bitcoin ETFs.121 Providing more coherent rules here would allow for the SEC “to lend predictability and intelligibility” to its actions.122
Enforcement is one of the many tools that the SEC holds in its arsenal of regulatory tools. Enforcement, without further guidance and clear instruction, provides nothing.123 Without a further developed regulatory framework, enforcement actions alone do not achieve the end goals of the SEC’s regulatory function.124 In the end, these enforcement actions hurt investors the SEC seeks to protect and disable participation in companies that would provide substantial utility. The SEC, with good reason, has sought to protect the investment market and its members from some of the riskier characteristics of the crypto industry. Instead of imposing stricter requirements on many of these proposed ETPs, like the significant market test in Grayscale’s appeal, the SEC should offer a clearer, more permissive test, that creates a consensus for how to deal with cryptocurrency as it continues to operate within the investor sphere.125 This in combination with those proposed rules like the safe harbors for certain digital assets discussed by Commission Peirce would provide clarity and safety.126
In the same vein, cryptocurrency companies are not alleviated from conducting their own due diligence inquiries. Hinman noted this in his speech and acknowledged the heightened requirements for counsel and promoters of things that behave closer to securities than consumer items in transactions.127 Those companies must take reasonable steps to apply their business scheme against the insight already provided by the SEC, as well as apply the Howey test to the relevant transactions.128
B. A Hyperbolic Characterization of Risk
Because of its anonymous and decentralized characteristics, cryptocurrency has long been denounced by its opponents as a catalyst for the financing of terrorism and money laundering.129 In the early days of cryptocurrency, during the infamous Silk Road and the use of Bitcoin for murder for hire, cryptocurrency was a completely unknown and unregulated area.130 Cryptocurrency, and specifically Bitcoin, was thought of as a currency used only by bad actors to fulfill illegal objectives.131 Such a regime no longer exists to allow digital currencies to evade the purview of DOJ authorities completely.132 Much of the fearmongering surrounding the crypto community has now resulted in endless legislative proposals aimed at curbing the perceived risks of the industry.133 Regulation still remains to curb some of the risks in the industry however the returns seen by investors allows optimism to surge past any fears.134
Among the legislative proposals targeted at cryptocurrency is the aforementioned DAAMLA bill, which aims to reduce the solicitation of money laundering and crime through the medium of cryptocurrency, among other alleged risks.135 Specifically, the bill targets certain parties involved in the transactional process, such as miners and validators.136 Senator Warren claims that the bill will close perceived national security loopholes lying within the cryptocurrency and blockchain industry by extending the anti-money-laundering (AML) and know-your-customer (KYC) requirements to a wider audience within the industry.137 Senator Warren’s fears are just as misplaced as her intended solution as the more pressing threats in the cryptocurrency industry involve foreign actors that impose the threats to national security.138 In contrast, the CEO of Ripple Labs, Brad Garlinghouse, has asserted that more responsible and prominent crypto companies already ensure the KYC requirements and requisite AML statutes are satisfied before launching shares of tokens like XRP.139
Senator Warren’s fears are likely fueled by those past actors who utilized cryptocurrency for fraudulent and deceitful purposes. Yet, Senator Warren’s claims are greatly overstated when applied to the crypto community as a whole given its positive record over the recent years.140 Cryptocurrency, even in recent years, remains a risky and volatile choice, whether as a commodity or an investment, just as most investments are.141 Regardless, the digital asset's utility and public reception proves that the asset is here to stay.142 A lack of regulatory guidance only creates costs and risks that are borne on the lay investor.143 The industry’s growth remains to be determined by the regulatory schemes imposed upon it.
C. Private Market Trends and Foreign Markets
While blockchain technology and cryptocurrency become more common and integrated within foreign markets, the regulatory approach to cryptocurrencies throughout the international arena remains extremely varied.144 Some countries have implemented the use of digital assets within the folds of their governments, while others, like the United States, have chosen to maintain an arms-length approach.145 Much like in U.S. markets, foreign regulations and legislative attempts aimed to decrease the inherent volatility of digital assets and deter criminal conduct and fraud have lagged.146 As a global leader in policy and regulation, the United States should follow this trend and adopt similar regulatory measures to allow U.S. investors to participate in a market with foreign competitors.147
Central institutional banks have followed industry trends and begun implementing blockchain technology throughout various facets of their businesses.148 CitiGroup recently announced the creation and pilot of its Citi Token Services for Cash management and trade finance.149 While the use of blockchain technology does not equal the facilitation of digital tokens as currency, this reflects an effort towards the integration of cryptocurrency in the private sector of banking—other major financial institutions such as JPMorgan Chase & Co. and Bank of America are following suit.150 In due time, other actors within the private sector will follow this trend as foreign and international enterprises abroad seek to ensure quicker and more efficient transactions and look to become more involved in opportunities involving these digital assets.151
On its face, cryptocurrencies offer a convenient form of payment based on digital technology that can make certain transactions safer, faster, and cheaper. On a macro scale, cryptocurrency provides sovereignties with the ability to analyze and regulate markets, as well as the possibility for increased cooperation amongst less developed countries more intelligently.152 In underdeveloped nations, cryptocurrency offers a solution to promote efficient banking institutions, increase harmonization within regional agreements, and foster collaboration with the developed world.153 Only with an effective regulatory regime with clear and particularized reasoning will this be able to come to fruition. Investors remain eager to become involved with cryptocurrency and regulatory certainty will allow a fairer and safer marketplace that provides structure for the rising industry.154
* Candidate for Juris Doctor, 2025, Northeastern School of Law. I sincerely thank Professor Eric Forni for the inspiration to write this paper following his instruction in his securities regulation course. The mentorship and guidance provided by Professor Forni were crucial to understanding many intertwining and multi-faceted laws at play within the scope of cryptocurrency. An additional thanks to my peers Bridget Araldi, Trevor Griffin, and Mia Monserrate for their feedback and engaging discussions concerning this topic which provided insight and helped frame much of this issue appropriately.
1 See U.S. Sec. & Exch. Comm'n, Press Release, SEC Announces Enforcement Results for Fiscal Year 2023 (Nov. 14, 2023), https://www.sec.gov/newsroom/press-releases/2023-234; Turner Wright, SEC Crypto Enforcement Actions Under Gary Gensler Reach 10-Year High, COINTELEGRAPH (Jan. 24, 2024), https://cointelegraph.com/news/sec-enforcement-actions-gary-gensler.
2 Adding further to the problem of whether the sale of cryptocurrency should be treated as a sale of securities is the fact that there are many terms, unique to blockchain technology, that are used synonymously but are distinct from one another. Some institutional banks define cryptocurrency as a digital medium of exchange similar to that of the US dollar which uses certain technology to validate transactions. More appropriately, crypto as a term of art simply refers to cryptography, which is the encoding and encryption that provides protection to sales. Cryptocurrency on the other hand refers more specifically to the digital token, such as a stablecoin or an altcoin. See Shobhit Seth, Explaining the Crypto in Cryptocurrency, INVESTOPEDIA (Apr. 8, 2024), https://www.investopedia.com/tech/explaining-crypto-cryptocurrency/; What is Cryptography, CRYPTO.COM (Jan. 6, 2022), https://crypto.com/university/what-is-cryptography; Roger E. Barton et al., Are Cryptocurrencies Securities? The SEC is Answering the Question, THOMAS REUTERS (Mar. 21 2022), https://www.reuters.com/legal/transactional/are-cryptocurrencies-securities-sec-is-answering-question-2022-03-21/.
3 SEC Mission (Aug. 9, 2023), https://www.sec.gov/about/mission.
4 See Press Release, U.S. Sec. & Exch. Comm'n, SEC Nearly Doubles Size of Enforcement’s Crypto Assets and Cyber Unit (May 3, 2022), https://www.sec.gov/newsroom/press-releases/2022-78.
5 Matthew Goldstein & David Yaffe-Bellany, Is Cryptocurrency Like Stocks and Bonds? Courts Move Closer to an Answer, N.Y. TIMES (Jan. 30, 2024), https://www.nytimes.com/2024/01/26/technology/cryptocurrency-stocks-bonds-courts-move-closer-to-an-answer.html; see e.g., SEC v. Ripple Labs, Inc., 682 F. Supp. 3d 308, 328 (S.D.N.Y. 2023), motion to certify appeal denied, S.D.N.Y., No. 20 CIV. 10832 (AT) (Oct. 3, 2023); see also Grayscale Invs., LLC v. SEC, 82 F.4th 1239, 1242 (D.C. Cir. 2023).
6 Jason Brett, Blockchain Association Fires Back At Senator Warren’s New Crypto Bill, FORBES (Feb. 13, 2024), https://www.forbes.com/sites/jasonbrett/2024/02/13/blockchain-association-fires-back-at-senator-warrens-new-crypto-bill/.
7 Id.
8 What Is the Newly Proposed US Stablecoin Bill?, UNCHAINED (May 8, 2024), https://unchainedcrypto.com/us-stablecoin-bill/.
9 Tanvi Ratna, Blockchain Regulation in the United States: Evaluating the Overall Approach to Virtual Asset Regulation, THE PROMISE OF PUBLIC INTEREST TECHNOLOGY: IN INDIA AND THE UNITED STATES 80, 80-84 (New America 2019), https://www.jstor.org/stable/resrep19980.9; see also Nina Babmysheva, 10 Largest Venture Rounds In Crypto And Blockchain, FORBES (Apr. 3, 2021), https://www.forbes.com/sites/ninabambysheva/2021/04/03/10-largest-venture-rounds-in-crypto-and-blockchain/.
10 Yan Xiao & Ziyang Fang, 3 Ways Digital Currencies Could Change Global Trade, WORLD ECON. F. (Jan. 13, 2022), https://www.weforum.org/agenda/2022/01/digital-currencies-international-trade/; see also FDIC, Financial Institution Letter on Notification of Engaging in Crypto-Related Activiites (Apr. 7, 2022), https://www.fdic.gov/news/financial-institution-letters/2022/fil22016.html#letter.
11 Id.
12 Javier Paz, The Future of Crypto and Blockchain: Fintech 50 2024, FORBES: DIGIT. ASSETS (Feb. 13, 2024), https://www.forbes.com/sites/javierpaz/2024/02/13/the-future-of-crypto-and-blockchain-fintech-50-2024/.
13 See David Chaum, Blind Signatures for Untraceable Payments, in Advances in Cryptology, 199-203 (D. Chaum et al. eds., Springer 1983); David Chaum et al., Untraceable Electronic Cash, in Advances in Cryptology 403, LNCS 319, 319-327 (Jan. 1, 2000); see also Evan Jones, A Brief History of Cryptocurrency: Explained for 2024, CRYPTOVANTAGE (July 11, 2024), https://www.cryptovantage.com/guides/a-brief-history-of-cryptocurrency/.
14 See generally Center for Governance of Change, Cryptocurrencies and the Future of Money (Madrid: CGC IE, Univ. 2019), https://www.ie.edu/cgc/research/cryptocurrencies-future-money/.
15 Jesse Hamilton, Crypto Won’t Get Long-Awaited U.S. Rules in 2024, but the Courts May Steer Its Future, COINDESK: CONSENSUS MAG. (Dec. 18, 2023), https://www.coindesk.com/opinion/2023/12/18/crypto-wont-get-long-awaited-us-rules-in-2024-but-the-courts-may-steer-its-future/; Thomas Kingsley, Who Regulates Crypto?, AM. ACTION F. (Aug. 9, 2022), https://www.americanactionforum.org/insight/who-regulates-crypto/.
16 This article’s discussion involves the use of the terms of both Exchange Traded Fund (ETF) and Exchange Traded Product’s (ETP), both of which are investment vehicles with some similarities however it should be noted that these terms are not synonymous. ETPs as an investment vehicle involve a number of different types of investments that may include funds or commodities or both. In comparison, ETFs are a more specific type of fund which allows investors to trade in certain indexes, centers or commodities and provide a more flexible way to invest without actually purchasing an asset. This article does not focus on the different types of investment vehicles or their specific characteristics, and for that reason both terms should simply be viewed as contemporary mediums of investment which may be utilized to allow investors access to digital assets. The nuanced reality of these different types of investments should be noted as adding to much of the confusion surrounding the sale of cryptocurrency. See generally Adam Hayes, Exchange-Traded Product (ETP) vs. Exchange-Traded Fund (ETF): What’s the Difference?, INVESTOPEDIA (Feb. 12, 2024), https://www.investopedia.com/etp-vs-etf-what-is-the-difference-8557256.
17 Andrey Sergeenkov, What Is Cryptocurrency, COINDESK (Nov. 29, 2021), https://www.coindesk.com/learn/what-is-cryptocurrency/.
18 Wulf A. Kaal & Craig Calcaterra, Crypto Transaction Dispute Resolution, 73 THE BUS. LAW. 1, 114 (2017).
19 Ratna, supra note 9, at 80-85.
20 Ratna, supra note 9, at 80-85.
21 See GRODEN ET. AL, UNCHARTED WATERS: A PRIMER ON VIRTUAL CURRENCY REGULATION AROUND THE WORLD 1-2 (Ctr. for a New Am. Sec., July 2018); see also CoinDesk Indices, BITCOIN (Mar. 13, 2024), https://www.coindesk.com/price/bitcoin/.
22 Groden, supra note 21.
23 Aashika Jain, What Is Cryptocurrency And How Does It Work, FORBES (June 14, 2023, 3:26 PM), https://www.forbes.com/advisor/in/investing/cryptocurrency/what-is-cryptocurrency-and-how-does-it-work/.
24 Andy Rosen, What Is Fiat Money, and How Does it Differ from Cryptocurrency?, NERDWALLET (Sept. 28, 2022), https://www.nerdwallet.com/article/investing/fiat-currency.
25 Jinghan Cai and Ahmed Gomaa, Initial Coin Offering to Finance Venture Capital, 22 THE J. OF PRIV. EQUITY 93, 94 (3d ed. 2019).
26 Id.
27 James Carter, ICO vs IPO: What’s the Difference and Which One is Better?, COINPOSTER (Mar. 15, 2023), https://coinposters.com/guides/ico-vs-ipo-whats-the-difference-and-which-one/; Stephen M. Humenik et al., CFTC and SEC Perspectives on Cryptocurrency and Digital Assets – A Jurisdictional Overview, 14 THE NAT'L L. REV. (May 6, 2022), https://www.natlawreview.com/article/cftc-and-sec-perspectives-cryptocurrency-and-digital-assets-volume-i-jurisdictional.
28 See SEC v. Telegram Grp. Inc., 448 F. Supp. 3d 352, 358-9 (S.D.N.Y. 2020); SEC v. LBRY, Inc., 639 F. Supp. 3d 211, 215 (D.N.H. 2022); U.S. Sec. & Exch. Comm'n, Litigation Release No. 25817: SEC Obtains Final Judgment against Bittrex Inc. and Bittrex Global Gmbh (Aug. 29, 2023), https://www.sec.gov/enforcement-litigation/litigation-releases/lr-25817.
29 Supra note 28; see also Merav Ozair, Ripple-SEC Court Ruling: Implications for the Crypto Industry and Investors, NASDAQ INC. (Aug. 4, 2023), https://www.nasdaq.com/articles/ripple-sec-court-ruling-implications-for-the-crypto-industry-and-investors.
30 Ozair, supra note 29.
31 Ratna, supra note 9, at 82-83.
32 Ratna, supra note 9, at 82, 84, 89, and 90.
33 Carter, supra note 27; see also Connor Donevan & Patrick Jarenwattananon, There’s a New Plan to Regulate Cryptocurrencies. Here’s What You Need to Know, NPR: TECHNOLOGY (June 14, 2022, 5:01 AM), https://www.npr.org/2022/06/14/1104303982/crypto-bitcoin-stablecoin-regulation-senate.
34 David Gura, Sam Bankman-Fried is Guilty, and the Industry He Helped Build Wants to Move On, NPR: BUSINESS (Nov. 11, 2023, 7:00 AM), https://www.npr.org/2023/11/11/1211886643/sbf-ftx-crypto-bitcoin-regulation-cryptocurrency-finance-bankman-fried.
35 Elizabeth Napolitano & Brian Cheung, The FTX Collapse, Explained, NBC NEWS: TECH (Nov. 18, 2022), https://www.nbcnews.com/tech/crypto/sam-bankman-fried-crypto-ftx-collapse-explained-rcna57582; Luc Cohen & Jody Godoy, Sam Bankman-Fried Convicted of Multi-Billion Dollar FTX Fraud, REUTERS (Nov. 3, 2023), https://www.reuters.com/legal/ftx-founder-sam-bankman-fried-thought-rules-did-not-apply-him-prosecutor-says-2023-11-02/.
36 Alex Nguyen, Cryptocurrency Firm FTX’s Fall Pains Industry, but Texas Stays Optimistic, TEX. TRIBUNE (Nov. 21, 2022), https://www.texastribune.org/2022/11/21/texas-crypto-blockchain-ftx-bankruptcy/; Hannah Lang et al., The Crypto Market Bears the Scars of FTX’s Collapse, REUTERS (Nov. 3, 2023), https://www.reuters.com/technology/crypto-market-still-bears-scars-ftxs-collapse-2023-10-03/.
37 Gura, supra note 34.
38 See COINDESK, Bitcoin (Mar. 13, 2024), https://www.coindesk.com/price/bitcoin/; Krisztian Sandor, ‘Groundhog Day’ in Crypto as Bitcoin Again Plunges Following New Record, COINDESK: CONSENSUS MAG. (Mar. 8, 2024), https://www.coindesk.com/markets/2024/03/08/groundhog-day-in-crypto-as-bitcoin-again-plunges-following-new-record/.
39 See Ripple Labs, 682 F. Supp. 3d at 308; Grayscale, 82 F.4th at 1239.
40 Chris Dolmetsch, Ripple Hit With $125 Million Penalty, Fraction of SEC Claim, BLOOMBERG NEWS (Aug. 7, 2024), https://news.bloomberglaw.com/securities-law/ripple-labs-is-ordered-to-pay-125-million-penalty-in-sec-case.
41 Goldstein, supra note 5.
42 Goldstein, supra note 5; see also Press Release, SEC, SEC Charges Ripple and Two Executives with Conducting $1.3 Billion Unregistered Securities Offering (Dec. 22, 2020), https://www.sec.gov/newsroom/press-releases/2020-338.
43 See Press Release, SEC, SEC Charges Coinbase for Operating as an Unregistered Securities Exchange, Broker, and Clearing Agency (June 6, 2023), https://www.sec.gov/newsroom/press-releases/2023-102; Jason Brett, Judge’s New SEC V. Coinbase Ruling Raises U.S. Crypto Policy Questions, FORBES: DIGIT. ASSETS (Mar. 27, 2024), https://www.forbes.com/sites/jasonbrett/2024/03/27/judges-new-sec-v-coinbase-ruling-raises-us-crypto-policy-questions/.
44 Ratna, supra note 9, at 86.
45 See generally SEC v. W.J. Howey Co., 328 U.S. 293 (1946); see also Ratna, supra note 9.
46 Derek Andersen, Crypto and Securities: New Interpretation of US Howey Test Gaining Ground, COINTELEGRAPH (Feb. 9, 2023), https://cointelegraph.com/news/crypto-and-securities-new-interpretation-of-us-howey-test-gaining-ground; see generally Olga Kharif & Matthew Miller, Ripple’s Garlinghouse Calls the SEC a ‘Bully’ Fresh Off Ruling, BLOOMBERG L. (July 14, 2023), https://news.bloomberglaw.com/crypto/ripples-garlinghouse-calls-the-sec-a-bully-fresh-off-ruling; Jake Chervinsky & Amanda Tuminelli, In Lejilex vs. SEC, Crypto Goes on Offense in the Courts, COINDESK: CONSENSUS MAG. (Feb. 23, 2024), https://www.coindesk.com/opinion/2024/02/23/in-lejilex-vs-sec-crypto-goes-on-offense-in-the-courts/.
47 Securities Exchange Act of 1934, 15 U.S.C. § 78(e) (amended 2022).
48 Id. at § 77b(a)(1) (defining security); see also, Reves v. Ernst & Young, 494 U.S. 56, 63-64 (1990) (holding that an instrument denominated as a “note” falls within the purview of the SEC under the family resemblance test of Securities Act and Exchange Act). The Reves test is another way that a certain asset constitutes a security; however, this test is neither applicable nor relevant to this scope of this article.
49 Howey, 328 U.S. at 298-99.
50 Id. at 294-295, 299.
51 Id. at 298-99.
52 Id. at 301.
53 William Hinman, Dir., Div. of Corp. Fin. SEC, Digital Asset Transactions: When Howey Met Gary (Plastic), Remarks at the Yahoo Finance All Markets Summit: Crypto (June 14, 2018) https://www.sec.gov/newsroom/speeches-statements/speech-hinman-061418; Howey, 328 U.S. at 298-99.
54 Hinman supra note 53; See Howey, 328 U.S. at 295.
55 Hinman, supra note 53.
56 See Howey, 328 U.S. at 301.
57 See Hinman, supra note 53.
58 *See* Hinman, *supra* note 53.
59 Grayscale, 82 F.4th at 1242.
60 Id. at 1249-51.
61 Id. at 1242.
62 See, e.g., Order Disapproving a Proposed Rule Change, Securities Exchange Act Release No. 34-96751, 87 FR 33250 (Jan. 26, 2023), https://www.sec.gov/rules/sro/cboebzx/2023/34-96751.pdf.; see also Order Disapproving a Proposed Rule Change to Amend NYSE Arca Rules, Securities Exchange Act Release No. 34-100217, 88 FR 73892 (May 22, 2022), https://www.sec.gov/files/rules/sro/nysearca/2024/34-100217; NYDIG Order, 87 Fed. Reg. 14932, 14932 (Mar. 16 2022); One River Order, 87 Fed. Reg. 33548, 33548 (June 2, 2022); Bitwise Order, 87 Fed. Reg. 40282, 40282 (July 6, 2022); see also Jamie Crawley, Bitcoin Spot ETF Proposals to Be Rejected by SEC: Matrixport, COINDESK: POLICY (Jan. 3, 2024), https://www.coindesk.com/policy/2024/01/03/bitcoin-spot-etf-proposals-to-be-rejected-by-sec-matrixport/.
63 Grayscale, 82 F.4th at 1244.
64 Id.
65 Id. at 1247; Order Disapproving a Proposed Rule Change to List and Trade Shares of the ARK 21Shares Bitcoin ETF under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, Securities Exchange Act Release No. 34-96751, 87 FR 33250 (January 26, 2023), https://www.sec.gov/files/rules/sro/cboebzx/2023/34-96751.pdf.
66 Grayscale, 82 F. 4th at 1249.
67 Id; see e.g., Complaint, SEC v. Payward, Inc., No. 3:23-cv-06003 (N.D. CA Nov. 20, 2023).
68 This article’s publication comes shortly at the heels of the High Courts holding in Loper Bright Enterprises v. Raimando overturning Chevron v. Natural Resources Defense Council. While not discussed within the scope of this article, this will no doubt result in further constraints on the SEC’s power. See Chervinsky & Tuminelli, supra note 46; Dan Papscun & Matthew Bultman, Federal Agencies Face Constitutional Fights After High Court Loss, BLOOMBERG L. (Apr. 17, 2023), https://news.bloomberglaw.com/antitrust/federal-agencies-face-constitutional-fights-after-high-court-loss.
69 Grayscale, 82 F.4th at 1246.
70 Press Release, SEC, SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities (July 25, 2017), https://www.sec.gov/newsroom/press-releases/2017-131; see supra note 28.
71 Supra note 70.
72 Supra note 70.
73 SEC, Addendum to Division of Enforcement Press Release, Fiscal Year 2023, https://www.sec.gov/files/fy23-enforcement-statistics.pdf; see also Danny Nelson, SEC in “Enforcement-Only Mode” for Crypto, Commissioner Peirce Says at ETHDenver, COINDESK: CONSENSUS MAG. (Feb. 29. 2024), https://www.coindesk.com/policy/2024/03/01/sec-in-enforcement-only-mode-for-crypto-commissioner-peirce-says-at-ethdenver/.
74 See Arjun Kharpal, ‘Can’t Get Their Act Together’: Crypto Firms Slam SEC, Washington for Lack of Clarity on Rules, CNBC: TECH (Mar. 23, 2023), https://www.cnbc.com/2023/03/24/cant-get-their-act-together-crypto-firms-slam-sec-washington-for-lack-of-clarity-on-rules.html.
75 See Grayscale, 82 F.4th at 1243-44.
76 Grayscale, 82 F.4th at 1252.
77 See, e.g., SEC v. Coinbase, Inc., No. 23 Civ. 4738, 2024 WL 1304037 (S.D.N.Y. Mar. 27, 2024).
78 Ripple Labs, 682 F. Supp. 3d at 321; see generally RIPPLE, https://ripple.com/xrp/; Ripple, CRUNCHBASE, https://www.crunchbase.com/organization/ripple-labs.
79 Ripple Labs, 682 F. Supp. 3d at 316.
80 Id. at 324.
81 Id.
82 Id; see also Jody Godoy, Ripple Labs Notches Landmark Win in SEC Case Over XRP Cryptocurrency, REUTERS (July 13, 2023), https://www.reuters.com/legal/us-judge-says-sec-lawsuit-vs-ripple-labs-can-proceed-trial-some-claims-2023-07-13/.
83 Ripple Labs, 682 F. Supp. 3d at 324.
84 Id. at 329.
85 Id.
86 Id. at 328-29.
87 Id.
88 Id. at 331.
89 Godoy, supra note 82; see also Michael Tabone, US Supreme Court Case Could Change Crypto Industry Regulation, COINTELEGRAPH (Mar. 5, 2024), https://cointelegraph.com/news/us-supreme-court-crypto-industry-regulation.
90 Ripple Labs, 682 F. Supp. 3d at 323.
91 Id. at n.11.
92 Daniel Roberts, Every Crypto Project Must Reckon With the SEC’s Howey Test, DECRYPT (Apr. 10, 2023), https://decrypt.co/124932/aptos-op-ed-web2-web3-gaming-advantages-global-ownership.
93 See Kharpal, supra note 74; Alison Frankel, Sorry Crypto World, but SEC Isn’t Backing Down on ‘Regulation by Enforcement’, REUTERS (Feb. 8, 2023), https://www.reuters.com/legal/sorry-crypto-world-sec-isnt-backing-down-regulation-by-enforcement-2023-02-08/.
94 Godoy, supra note 82.
95 Jesse Hamilton, Crypto Won’t Get Long-Awaited U.S. Rules in 2024, But the Courts May Steer Its Future, COINDESK: OPINION (Dec. 18, 2023) (updated June 14, 2024), https://www.coindesk.com/consensus-magazine/2023/12/18/crypto-wont-get-long-awaited-us-rules-in-2024-but-the-courts-may-steer-its-future.
96 See Eleanor Terrett, Court Decisions Could Rein in SEC Authority Over Crypto Industry, THE WEALTH ADVISOR (Jan. 18, 2024) (updated Jan. 19, 2024), https://www.thewealthadvisor.com/article/court-decisions-could-rein-sec-authority-over-crypto-industry; see also Jason Brett, Judge’s New SEC V. Coinbase Ruling Raises U.S. Crypto Policy Questions, FORBES: DIGIT. ASSETS (Mar. 27, 2024), https://www.forbes.com/sites/jasonbrett/2024/03/27/judges-new-sec-v-coinbase-ruling-raises-us-crypto-policy-questions/.
97 See Lorenzo v. SEC, 587 U.S. 71 (2019); see also, Janus Cap. Grp., Inc. v. First Derivative Traders, 564 U.S. 135 (2011).
98 See Hinman, supra note 53.
99 See Hinman, supra note 53.
100 See Hinman, supra note 53; see also Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 756 F.2d 230 (2d Cir. 1985).
101 See Hinman, supra note 53.
102 See Hinman, supra note 53.
103 See Hinman, supra note 53; see also Prepared Remarks of Gary Gensler on Crypto Markets, SEC Chairman, Gary Gensler (Apr. 4, 2022) (on file with SEC).
104 See Hinman, supra note 53.
105 See Hinman, supra note 53.
106 See Hinman, supra note 53.
107 See Hinman, supra note 53.
108 See Hinman, supra note 53.
109 Joel Khalili, Confusion Spirals in Crypto as the US Cracks Down, WIRED: BUS. (Feb. 13, 2023), https://www.wired.com/story/confusion-spirals-in-crypto-as-the-us-cracks-down/.
110 Dan Ikenson, America Requires Regulatory Clarity Before Blockchain Bears Its Bounty, FORBES: BUS. (May 2, 2024), https://www.forbes.com/sites/beltway/2024/05/02/america-requires-regulatory-clarity-before-blockchain-bears-its-bounty/.
111 Khalili, supra note 109; Morgan Davis, Is Regulation Good for Crypto? Find Out How It Impacts Your Wealth!, DOUBLOIN (Sept. 8, 2023), https://www.doubloin.com/learn/crypto-regulation-benefits/.
112 Statement on the Approval of Spot Bitcoin Exchange-Traded Products, SEC Chairman, Gary Gensler (Jan. 10, 2024) (on file with SEC).
113 Id.
114 Jesse Hamilton, SEC Lays Its Cards on the Table With Assertion That DeFi Falls Under Securities Rules, COINDESK: POLICY (Apr. 17, 2023), https://www.coindesk.com/policy/2023/04/17/sec-lays-its-cards-on-the-table-with-assertion-that-defi-falls-under-securities-rules/#:~:text=The%20U.S.%20Securities%20and%20Exchange,securities%20world%20and%20will%20be; see also Sean Stein Smith, 3 Reasons Why the U.S. Needs To Embrace Bicoin (And Other Crypto), FORBES: DIGIT. ASSETS (Mar. 31, 2024), https://www.forbes.com/sites/digital-assets/2024/03/31/3-reasons-why-the-us-needs-to-embrace-bitcoin-and-other-crypto/.
115 Hamilton, supra note 114; see also Khalili, supra note 109.
116 Hester M. Peirce, SEC Commissioner, On the Spot: Remarks at “Regulatory Transparency Project Conference on Regulating the New Crypto Ecosystem: Necessary Regulation or Crippling Future Innovation?” (June 14, 2022) (on file with SEC); see also Hester M. Peirce, SEC Commissioner, Outdated: Remarks before the Digital Assets at Duke Conference (June 20, 2023) (on file with SEC).
117 Grayscale, 82 F.4th at 1242.
118 Securities Exchange Act of 1934, 15 U.S.C. § 78f(b)(5) (2022).
119 Christina Pazzanese, Regulators Put Cryptocurrency in Crosshairs, HARV. GAZETTE (Sept. 29, 2021), https://news.harvard.edu/gazette/story/2021/09/regulating-the-unregulated-cryptocurrency-market/; see also Khalili, supra note 109.
120 Pazzanese, supra note 119; Khalili, supra note 109.
121 Ephrat Livni, Crypto Needs More Rules and Better Enforcement Regulators Warn, N.Y. TIMES: CRYPTOCURRENCY (Oct. 3, 2022), https://www.nytimes.com/2022/10/03/business/cryptocurrency-regulation-stablecoin.html; see generally Helen Partz, US Lawmakers Urge SEC’s Gensler to Approve Spot Ehtereum ETF, COINTELEGRAPH (May 23, 2024), https://cointelegraph.com/news/lawmakers-urge-sec-approve-spot-ethereum-etf.
122 Grayscale, 82 F.4th at 1245 (quoting Baltimore Gas & Elec. Co. v. FERC, 954 F.3d 279, 286 (D.C. Cir. 2020)).
123 Danny Nelson, SEC in ‘Enforcement-Only Mode’ for Crypto, Commission Peirce Says at ETHDenver, COINDESK: POLICY (Feb. 29, 2024), https://www.coindesk.com/policy/2024/03/01/sec-in-enforcement-only-mode-for-crypto-commissioner-peirce-says-at-ethdenver/.
124 Id.
125 Id.
126 Id.
127 Hinman, supra note 53, at 6-7.
128 Hinman, supra note 53.
129 Kevin Webach, Trust, but Verify: Why The Blockchain Needs the Law, 33 BERKELEY TECH. L.J. 489, 491-96 (2018).
130 Colin Harper, The Long and Winding Story of Silk Road, Bitcoin’s Earliest Major Application, BITCOIN MAG. (Oct. 1, 2020), https://bitcoinmagazine.com/culture/the-long-and-winding-story-of-silk-road-bitcoins-earliest-major-application; Erika Rasure & Timothy Li, What Was the Silk Road Online? History and Closure by the FBI, INVESTOPEDIA (June 29, 2024), https://www.investopedia.com/terms/s/silk-road.asp.
131 Harper, supra note 130; see also George Calhoun, The Ethics Of Crypto: Good Intentions And Bad Actors, FORBES: DIGIT. ASSETS (Oct. 27, 2022, 8:18 AM), https://www.forbes.com/sites/georgecalhoun/2022/10/11/the-ethics-of-crypto-sorting-out-good-intentions-and-bad-actors/.
132 See Coryanne Hicks, Is Bitcoin Safe? What You Need To Know, FORBES: ADVISOR (June 12, 2023), https://www.forbes.com/advisor/investing/cryptocurrency/is-bitcoin-safe/.
133 Tim Alper, Crypto Community Smarts at US Regulators ‘Fear-mongering’ Stablecoins Report, CRYPTONEWS (Oct. 22, 2023), https://cryptonews.com/news/crypto-community-smarts-at-us-regulators-fear-mongering-stablecoins-report-1.htm.
134 Pazzanese, supra note 119.
135 Digital Asset Anti-Money Laundering Act, S. 2669, 118th Cong. (2023).
136 Id.
137 Roger Huang, Resistance Builds Against The Warren “Anti-Crypto” Agenda, FORBES: DIGIT;. ASSETS (Aug. 15, 2024), https://www.forbes.com/sites/digital-assets/2024/08/15/resistance-builds-against-the-warren-anti-crypto-agenda/; see also Brett, supra note 6.
138 Huang, supra note 137; see also Alexandra Alper & David Ljunggren, US to Force China-Linked Firm to Sell Land Near US Missile Silos, THOMAS REUTERS (May 14, 2024), https://www.msn.com/en-us/news/world/us-to-force-china-linked-firm-to-sell-land-near-us-missile-silos/ar-BB1mkazH?ocid=BingNewsSerp.
139 The Bloomberg Crypto Show, Ripple CEO Calls for More Clarity on Crypto Regulation, BLOOMBERG (Feb. 20, 2024, 5:55 PM), https://www.bloomberg.com/news/videos/2024-02-20/ripple-ceo-calls-for-more-clarity-on-crypto-regulation-video.
140 Armaan Jashi, Why Is the Crypto Markte Rising Today?, FORBES: ADVISOR (June 10, 2024), https://www.forbes.com/advisor/in/investing/cryptocurrency/why-is-crypto-going-up/; Kadan Stadelmann, Elizabeth Warren Uses Hamas as Her Newest Scapegoat in War on Crypto, COINTELEGRAPH (Oct. 24, 2023), https://cointelegraph.com/news/elizabeth-warren-uses-hamas-scapegoat-war-on-crypto.
141 Elizabeth Howcroft, Focus: Crypto Investors Step Up Risk Management After Last Year’s Meltdowns, THOMSON REUTERS: TECHNOLOGY (June 16, 2023), https://www.reuters.com/technology/crypto-investors-step-up-risk-management-after-last-years-meltdowns-2023-06-15/.
142 See Rob Nelson, Elizabeth Warren’s Opponent Calls for a Pro-Crypto Agenda, THE STREET ROUNDTABLE: POLICY (June 7, 2024), https://www.thestreet.com/crypto/policy/elizabeth-warrens-opponent-calls-for-a-pro-crypto-agenda; Abby Schultz, Younger Investors Prefer Crypto, Private Equity, and Hard Assets to U.S. Stocks, Study Finds, BARRON’S (June 18, 2024), https://www.barrons.com/articles/younger-investors-prefer-crypto-private-equity-and-hard-assets-to-u-s-stocks-study-finds-e3fffce0; Luke Conway, Why Is Bitcoin’s Price Rising?, INVESTOPEDIA (May 3, 2021), https://www.investopedia.com/tech/cryptocurrency-this-week/.
143 Hal Scott, Investors at Risk in Absence of Adequate US Crypto Regulatory Regime, FIN. TIMES: OP. (June 23, 2023), https://www.ft.com/content/fa6f17e9-48cb-4846-8214-e7a95ed0a3f7.
144 See Groden, supra note 21.
145 See Groden, supra note 21.
146 See Groden, supra note 21.
147 Sarah Morton & David Lawant, What in the World Is Going on With Crytpo Regulation?, COINDESK (Aug. 10, 2023), https://www.coindesk.com/coindesk-indices/2023/08/10/what-in-the-world-is-going-on-with-crypto-regulation/.
148 Press Release, Citigroup Inc., Citi Develops New Digital Asset Capabilities for Institutional Clients (Sept. 18, 2023), https://www.citigroup.com/global/news/press-release/2023/citi-develops-new-digital-asset-capabilities-for-institutional-clients.
149 Id.
150 Helene Braun, Bank of America, Wells Fargo to Offer Spot Bitcoin ETFs to Clients: Bloomberg, COINDESK (Feb. 29, 2024), https://www.coindesk.com/business/2024/02/29/bank-of-america-wells-fargo-to-offer-spot-bitcoin-etfs-to-clients-bloomberg/.
151 Eliza Gkritsi & Aoyon Ashraf, Banking Crisis in U.S. Likely to Push Crypto Firms Offshore, COINDESK (May 9, 2023), https://www.coindesk.com/business/2023/03/14/banking-crisis-in-us-likely-to-push-crypto-firms-offshore/.
152 Jonathan Wheatley & Adrienne Klasa, Cryptocurrencies: Developing Countires Provide Fertile Ground, FIN. TIMES: CRYPTOCURRENCIES (Sept. 5, 2021), https://www.ft.com/content/1ea829ed-5dde-4f6e-be11-99392bdc0788; Hekuran Gashi, What Bitcoin and Cryptocurrency Adoption Could Present for Developing Countries, BITDELTA (Aug. 9, 2024), https://bitdelta.com/en/blog/academy/what-bitcoin-and-cryptocurrency-adoption-could-present-for-developing-countries; see also Kevin Owacki, How Crypto Can Do Good for the World, COINDESK (June 6, 2024, 5:18 PM), https://www.coindesk.com/business/2022/06/06/how-crypto-can-do-good-for-the-world/.
153 Nikita Tambe, Advantages and Disadvantages of Cryptocurrency in 2024, FORBES (Jan. 10, 2024), https://www.forbes.com/advisor/in/investing/cryptocurrency/advantages-of-cryptocurrency/; see generally Merlin Lisa, The Rise of Social Crypto Exchanges in Web3: How Social Crypto Exchanges Foster Community Engagement?, MEDIUM: COINMONKS (Mar. 15, 2024), https://medium.com/coinmonks/rise-of-social-crypto-exchanges-in-web3-042406823bbe.
154 See Peirce, supra note 116.