Crypto Under the Eye, Top Lawyer Explains SEC’s Latest Steps

The U.S. Securities and Exchange Commission (SEC) has recently increased its enforcement actions against the crypto industry. Its Chairman, Gary Gensler, leads the charge against the nascent asset class. 

As the U.S. watchdog tightens its policies against the various services of crypto exchanges under its jurisdiction, it has created a wave of concern and fear among investors and customers of exchange platforms. 

SEC-Crypto Divide Continues To Widen

On February 23rd, SEC Chair Gary Gensler stated in an interview with the New York Magazine (NYMAG) that “everything other than Bitcoin” is a security in the U.S. Jurisdiction under the Howey Test rules. 

This follows the ongoing policy against tokens that support various services to U.S. customers of the exchanges, such as staking services. Bitcoin is the exception, according to Gensler, given its “unique history and creation story, which is fundamentally different from other crypto projects.” The SEC Chair added:

They might drop their tokens overseas at first and contend or pretend that it’s going to take six months before they come back to the U.S. But at the core, these tokens are securities because there’s a group in the middle and the public is anticipating profits based on that group.

Gabriel Shapiro, General Counselor at Delphi Labs, who has more than a decade of experience in structuring, negotiating, and executing strategic transactions for clients in the tech sector, addressed the SEC Chairman’s recent statements in a post on Twitter. Shapiro highlighted the importance of the rest of the tokens other than Bitcoin, which have different applications and services in the financial sector. 

Shapiro took the SEC Chairman’s hypothesis and concluded that with a total crypto market cap of $1.13 trillion, consisting of 12,306 tokens in the crypto industry, in which Bitcoin accounts for a portion of $467 billion, 40% of the total market cap, 12,305 tokens are allegedly operating illegally in the U.S. given that they are publicly traded as “unregistered securities.”

For Shapiro, the SEC has failed in how it has handled the tokens, which he classified in two main ways:

(1) fine + registration requirement–this failed every time so far, with the companies becoming bankrupt 

(2) fine + order to destroy all premined tokens and delist tokens from all exchanges

both ways, tokens go to $0

In addition, Shapiro believes that SEC registration is expensive for most token creators, coupled with an unclear path for token registration. Shapiro believes this framework and the Howey test rules would mean 12,305 lawsuits and “wiping out” $663 billion from the market.

Since registration is not “feasible,” according to Shapiro, every token creator must pay hefty fines to register the tokens. This could lead to the cessation of token development and further delisting from crypto exchanges. 

The concern about the SEC’s approach to the industry has now affected stablecoins and services that exchanges provide in U.S. jurisdictions. This may result in capital fleeing the shores of the American country. Meanwhile, without a clear regulatory path for investors, questions and uncertainties will continue accumulating in the crypto industry.


The total market cap of the crypto industry is now sitting at $1.02 trillion, representing a -1.39% change in the last 24 hours and a -37$ change one year ago. At press time, Bitcoin’s market cap is at $450 billion, representing a dominance of 40.25%. 

On the other hand, the stablecoins market cap is at $136 billion and has a 12.18% share of the global market cap of the crypto ecosystem, according to CoinGecko data

Feature image from Unsplash, chart from TradingView. • 2023