The SEC does not regulate crypto directly, but indirectly; Says Levine By CoinEdition

• Matt Levine published an article on the SEC’s crypto regulatory guidelines.
• He talked about the creativity of the SEC, by indirectly regulating the crypto sector.
• The categorization of tokens and interest-bearing accounts in securities is also discussed in the article.

Matt Levine, Bloomberg Opinion Columnist, published an article on February 7 analyzing the Securities and Exchange Commission’s (SEC) crypto regulatory guidelines.

Notably, Chinese reporter Colin Wu, on his official Twitter account, shared the article, highlighting Levine’s perspectives on the SEC’s crypto regulations:

Bloomberg Finance Columnist Matt Levine’s Analysis of SEC Regulatory Guidelines: Defines Most Tokens as Securities; define interest-bearing products as securities; the power of regulatory investment advisers to indirectly regulate pic.twitter.com/qGkxntEjoS

— Wu Blockchain (@WuBlockchain) February 19, 2023

Significantly, Levine focused on the authority the SEC has to regulate or invent regulatory procedures over the crypto sector. He also talked about the power of “regulatory investment advisers to indirectly regulate cryptocurrencies”.

Interestingly, Levine exemplified the SEC’s power with the categorization of tokens as “securities”, commenting:

The SEC argues that when crypto projects issue tokens to fund development, these tokens are almost always securities: Except for a few grandfathered tokens such as and Ether, most tokens will be securities subject to SEC jurisdiction.

In addition, the SEC also entitles “interest-bearing crypto accounts – lending and betting products” – as securities. In detail, he explained that if a crypto exchange holding BTC pays the interest on the coin, the account is also considered to be in compliance with SEC jurisdiction.

Furthermore, Levine commented on the SEC’s creativity, claiming that the commission does not regulate crypto, but has launched “a pretty comprehensive offensive to take over crypto regulation”:

The SEC “doesn’t regulate crypto”. In US law, at least some cryptocurrencies — the big ones, like Ether and Bitcoin — are classified as commodities that are not subject to SEC jurisdiction.

Notably, Levine pointed to the SEC’s use of its authority over investment advisers to indirectly create crypto regulations. Specifically, since investment funds are under the control of the SEC, the crypto will also be subject to its jurisdiction.

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