The US Securities and Exchange Commission (SEC) cryptocurrency-related actions reached a new high in 2023, jumping more than 50% compared to 2022. Although the SEC continues to consider the application of cryptocurrencies as a top priority, the question of what role the SEC should play in regulating cryptocurrencies has been an ongoing debate. However, we expect the SEC's enforcement efforts in this area to continue at a high pace in 2024, although it remains uncertain whether or not cryptocurrencies should be classified as securities or something else.
The uncertain rule of law
SEC Chairman Gary Gensler has made clear that he believes the existing securities regime adequately governs cryptocurrencies. In his opinion, most cryptocurrencies are securities based on hello proof. Under the hello test, a transaction is considered a security if it meets four criteria:
- money is invested;
- there is an expectation that the investor will make a profit;
- investment is a common enterprise; and
- Profits are generated through the efforts of others.
