Securities lawyers and crypto pundits kicked around a long-held question — what makes something a security — at the U.S. Securities and Exchange Commission's inaugural crypto task force roundtable.
At the SEC's headquarters in Washington on Friday, a panel of securities lawyers, some crypto critics and others gathered to discuss their views as the agency takes on a significantly different approach to the industry following years of what some crypto advocates call a "regulation by enforcement" approach.
The SEC's approach to crypto wasn't working, said a16z crypto General Counsel Miles Jennings at the roundtable, alluding to the agency's three-part mission.
"I don't think that anyone could credibly argue that the last administration's approach to the industry accomplished any of the SEC's objectives," Jennings said. "It did not lead to investor protection, it did not lead to capital formation and it did not lead to efficient markets."
"As a result of that, the current approach is clearly a failure and we have to do better," Jennings said.
The creation of the crypto task force was one of several moves the SEC has made under the new Trump administration and after its former Chair, Gary Gensler, left his post. Gensler had been more weary of the industry, calling most cryptocurrencies securities and bringing a number of charges against big crypto players.
Acting Chair Mark Uyeda tapped fellow Republican Commissioner Hester Peirce to lead the task force. The SEC has a new beginning and a "restart of the Commission’s approach to crypto regulation," Peirce said on Friday.
Rodrigo Seira, special counsel at Cooley LLP, tackled the question of what makes an asset a security.
"I think it's key for us to understand that just because there's investment intent behind the purchase doesn't turn that transaction automatically into a security, right?" Seira said.
Seira drew comparisons to buying a piece of art he purchased in New York partly because he liked the artist's work but also because of his ongoing work.
"I thought it was cool, but also it was somewhat of a bet that he would keep working, and he had a couple of shows lined up that I thought were interesting," Seira said. "I don't think that means that that transaction all of a sudden should be regulated as a securities transaction."
John Reed Stark, of John Reed Stark Consulting LLC and who has been more critical of crypto, took a different approach. Stark argued that people are buying crypto because they are investors, and that it is the SEC's job to protect them. However, he said he appreciated the idea that "these laws can be done better."
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