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BCLP Partner Ashley Ebersole was quoted Aug. 16 by Compliance Week regarding Gary Gensler’s recent comments about regulatory priorities of the Securities and Exchange Commission (“SEC”) in the digital asset space, and specifically to cryptocurrency. Ebersole noted that Gensler sounds like a regulator willing to use every tool at his disposal to regulate these instruments in a more robust manner. “It sounded like an abrupt turn away from the policy priorities of prior SEC leadership and more of an approach that leads with consumer protection,” Ebersole said. “It was a call for doing everything it can within its jurisdictional bounds.” Following the July 2017 DAO Report that confirmed the securities laws’ application to digital assets, there was further clarification in 2019 around applying the Howey test for investment contract securities in this context. The SEC’s description of characteristics that would qualify a digital asset as a security underscored that its approach might consider many cryptocurrencies to be securities. Ebersole pointed out that these pronouncements did not meaningfully clarify things from the innovators’ perspective. “There is a fundamental disconnect between the way the SEC sees the Howey test and the way the cryptocurrency and digital assets industry sees it,” Ebersole said. “They say, ‘How are we supposed to look at an 80-year-old Supreme Court decision and understand what a security is?’”


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