- Bill Morgan thinks the SEC would vary its argument on digital assets classification.
- The SEC will argue that any sale by an issuer of an asset without inherent value is an investment contract.
- The regulator would uphold that position until there is a developed secondary market.
Renowned lawyer and digital assets enthusiast Bill Morgan thinks the Security and Exchange Commission (SEC) would vary its argument on the ongoing issue of digital assets classification. According to Morgan, the SEC will argue a broader issue, that any sale by an issuer of an asset without inherent value is an investment contract.
In a recent post on X (formerly Twitter), Morgan noted that the SEC would uphold that position until there is a developed secondary market and if it can, beyond that time.
Morgan expressed his opinion based on what he identified as a subtle change in the SEC’s original position that described digital assets as securities. According to Morgan, the regulator has shifted its argument to say that most crypto tokens are subject to securities laws. He highlighted this in the SEC’s released testimony for Gary Gensler, the SEC Chair’s upcoming House Financial Services hearing.
A portion of the document read:
Given that most crypto tokens are subject to securities laws, it follows that most crypto intermediaries comply with the securities laws as well.
The lawyer believes the SEC lost the narrow issue of whether the token is a security. He noted that in the Ripple case when making it clear that it is not seeking appellate review of the judge’s finding on that issue, the SEC further added deliberately that the token itself has no inherent value.
Ripple’s Chief Legal Officer, Stuart Alderoty, expressed his lack of confidence in the SEC chair’s upcoming outing. Alderoty thinks Gensler would attempt to twist the facts during the proposed House hearing. According to Alderoty, the SEC Chair will go to Congress and lie by stating that there is such a thing as a “crypto asset securities market” and that tokens themselves are investment contracts.
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