1/ Today, @blockchainassn and @fund-defi filed an amicus brief in support of @krakenfx's fight against the SEC.  

The case is yet another overreach of authority in the SEC’s long campaign to force most digital assets into its jurisdiction. 🧵

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1/ Today, @blockchainassn and @fund-defi filed an amicus brief in support of @krakenfx's fight against the SEC.  

The case is yet another overreach of authority in the SEC’s long campaign to force most digital assets into its jurisdiction. 🧵

https://tinyurl.com/yr2txmnb

Head of Legal @ Blockchain Association. Casts not legal advice. 

Author of @ The Undefined on Substack. 

3/ Their newest theory relies on the existence of an “ecosystem.” According to the SEC, such an asset is a security if that asset’s value grows or declines in tandem with the efforts of the asset’s creator to develop that ecosystem.

4/ But this would turn any asset surrounded by an ecosystem into a security. Should the SEC be regulating Barbie? Or Pokemon? Think about all the 90s-early 2000s era collectibles that would then fall under SEC jurisdiction. Or even Tesla & the reliance on its charging network.

5/ If the court were to accept the SEC’s theory – that an investment contract exists when a buyer believes an asset will rise in value due to a creator or seller’s efforts or statements – the SEC would have nearly unlimited jurisdiction over all commercial transactions.

6/ Statements or beliefs on their own do not give rise to the kind of ongoing obligation that makes an asset become an investment contract. More is needed.

7/ The SEC’s varied and contradictory theories for what constitutes an investment contract misinterpret existing law and deny industry participants fair notice of when registration is required.

8/ The industry needs more clarity and the SEC fails the public, entrepreneurs, and investors by not providing it.

9/ This is why we turn to the courts. Courts are playing an important role in keeping SEC overreach in check, while also adding much-needed clarity. Amicus briefs help the court understand the dynamic at play so the court can make a decision with eyes wide open.

10/ We are proud to support Kraken in their efforts to achieve clarity. And we look forward to a day when the SEC takes a good-faith approach. Until then, we will continue to fight in court.

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2/ We explain how the SEC’s interpretation of Howey has changed over time, consistently contravening history, precedent, and common sense. 

Without an ongoing contractual arrangement, digital assets are just that – assets. Not securities.