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investors out of private placements; the wealth-based test ($200K+ income or $1M net worth, unchanged since 1982) is outdated but difficult to replace with knowledge tests.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