Jake Chervinsky: Defending Crypto from the SEC

— Securities law basics and how the Howey test applies to crypto tokens, determining whether digital assets qualify as regulated securities based on four factors.

— ICO enforcement challenges: most projects will likely settle with the SEC rather than litigate, creating a patchwork of precedents rather than clear legal standards.

— Accreditation requirements lock non-wealthy investors out of private placements; the wealth-based test ($200K+ income or $1M net worth, unchanged since 1982) is outdated but difficult to replace with knowledge tests.

— Tax reporting gaps: few early crypto traders reported capital gains; recent IRS clarification that crypto-to-fiat exchanges are taxable events created massive unreported liability, though enforcement focus remains on recent, larger transactions.

— Anti-money laundering (AML) and money transmitter regulations will likely pose bigger regulatory threats than securities law as adoption grows, particularly around decentralized exchanges and privacy-enhancing technologies.

— Government surveillance and financial crime enforcement may shift from blanket monitoring to selective focus on on-ramps and off-ramps as truly decentralized systems mature.

— Determine your tax position now if you've traded crypto; even if you believe early trades were non-taxable, the IRS's 2017 clarification retroactively applies to past transactions, and larger recent gains carry higher enforcement risk.

— If issuing a token, selling exclusively to accredited investors via Regulation D (Rule 506) provides a safe harbor from securities registration requirements; alternative paths (Reg A+, registration) require significantly greater compliance overhead.

— Prioritize Bitcoin and proven Layer 1 protocols over speculative altcoins; security is the base requirement for blockchain utility, and network effects and proof-of-work consensus likely favor fewer dominant chains long-term.