The SEC can threaten, but they may have blown up their opportunity to regulate cryptocurrency. If they lose the Ripple vs SEC lawsuit (and, according to observers, it's not been going as well for the SEC as they would wish), they could permanently lose almost all ability to regulate cryptocurrency by their lack of timely action and because of one speech by an SEC official four years ago.
The SEC is basically trying to argue that the speech was personal opinion (and the speech said that ETH was not a security), but Ripple alleges that the speech, though perhaps not an official statement, was much more than a personal opinion. We now know the SEC lawyers were involved in writing the speech, which is making life difficult for the SEC. This is also why the SEC is being far more careful now and is saying only BTC is not a security, but that ship may have sailed.
It's being called the Crypto Trial of the Century. A win for Ripple on the SEC's slip-up could mean the SEC is powerless to intervene in most crypto markets. A win for the SEC would result in mass regulation.
No lawyers familiar with how administrative agencies work agree with that assessment. And that is, importantly, not how rulemaking works at administrative agencies.
EDIT: Administrative agency "rulemaking" is constrained by a fixed set of procedures that an agency must follow in order to "promulgate" a rule. First, they must publish a draft of the proposed rules, allow for several weeks or months of public comment, spend several weeks or months reviewing those comments, revise the rules as needed based on the comments received (or explain why no revisions are necessary), and then finally publish the finalized rules in the Federal Register.
Comments made by a single employee do not convey, or constrain, an agency's position on matters within its scope (unless those comments are made in, and pursuant to, a legal proceeding, in which case they are binding only for the limited scope of that legal proceeding).
The closest this article comes to your claim is when it says the case “could settle the turf war between regulatory agencies like the Commodities Futures Trading Commission, the Consumer Financial Protection Bureau and the SEC, all vying for jurisdiction in the space” [1].
A Ripple win would apply to the facts and circumstances of Ripple and XRP, and isn’t expected by anyone informed to set a broad precedent constraining the SEC’s powers.
The saying in Washington is that no one is safe when Congress is in session. And that's pretty much true. Aside from some constitutionally guaranteed activities like petitioning for redress of grievances, they can pretty much legislate anything they can agree upon. (Assuming they can ever agree on anything.)
For instance, the duly elected Democrats who control the House, Senate and White House like to point the finger at the Supreme Court, but they could easily pass whatever law they want about abortion. There would be no more arguing about original intent or penumbrae etc.
The problem with legislature affirming your right to body autonomy is that the next legislature can take it away.
Rights need a stronger foundation than being a bi-annual political yo-yo.
Procedural and executive questions, on the other hand, are the kind of thing the legislature should either take a direct hand in through legislature, or delegate to the executive (When they do the latter, there is actually more public accountability than the former, thanks to the required public processes behind executive rule-making.)
They technically could but it doesn’t appear they are going to try which means they either don’t have the votes or think that it’s better to try and wait until after the midterms
They don't have the votes to break a filibuster in the Senate (on nearly anything; Republican party discipline is really strong) or to break the filibuster itself (a handful of Democrats refuse). So almost all votes are just messaging at this point.
I also wouldn't assume a federal Act guaranteeing abortion access would survive the supreme court. There's a colourable claim that both healthcare and homicide regulation are the purview of the states, and I'd expect five votes for that with the current Court on this issue regardless of its legal merits.
Of course in order to reject that healthcare qualifies under interstate commerce, they would need to either reject Wickard v. Filburn and Gonzalez v. Raich, or jump through some crazy hoops to justify upholding those, while stricking this law down. (Although I'd not be shocked if this court tried).
Actions regulating healthcare within one state have at least as much impact on interstate commerce as growing pot or wheat for personal use. Healthcare is not strictly limited to state lines. My insurance does cover visiting doctors in a neighboring state for example.
Reopening Filburn would raise a crazy amount of questions. USDOT regulation of commercial trucking could falter if Filburn was struck down. Until some new clear line on what the limit was, there would be widespread uncertainly about the federal government's ability to regulate things like commercial trucking, flights, drugs, etc, at least for transactions that don't cross state lines.
I doubt they would actually go that far, as the republican party are not actually anti-federalists, despite often pretending to be that way.
My perspective is perhaps coloured by being a political scientist: we have always (unlike the law professors) seen the supreme court in particular as a deeply political institution.
The present incumbents have made clear that they're open to reopening settled questions, and to a results-focused jurisprudence. Given that New York State Rifle and Pistol Association has just undercut state power in favour of constitutional interpretation while Dobbs goes entirely the other way, my presumption is that there are no major strictly federalist principles at play and results will be case-by-case. And, as with Bush v. Gore, they can always publish an opinion saying "this decision is confined to its own facts" if they want to signal that they're not intending to displace post-Lochner understandings of the commerce clause.
Would you mind sharing more of your thoughts on what might play out if the SEC loses? And then also, if you don't mind, what would happen if the SEC wins?
If the SEC loses, unless Congress were to pass a law to grant more authority, the SEC would have almost no ability to regulate cryptocurrency as they would have no ability to define cryptocurrency as a form of "security" (which is the purview they are granted legal authority over, even in their name, the Securities and Exchange Commission).
If the SEC wins, they can define some cryptocurrencies as "securities" which then automatically becomes part of their regulatory authority.
This is why they are being careful to say only Bitcoin isn't a security now. That speech in 2018, centerpiece of the lawsuit, said Ethereum also was not a security. If that speech is found a legally binding statement, it's really hard to find anything smart-contract-powered from Ethereum to XRP as a security.
> This is why they are being careful to say only Bitcoin isn't a security now. That speech in 2018, centerpiece of the lawsuit, said Ethereum also was not a security. If that speech is found a legally binding statement, it's really hard to find anything smart-contract-powered from Ethereum to XRP as a security.
That seems like a leap. Paper is a commodity, but a stock certificate is (or represents, whatever) a security. A contract may be written on paper, but create a security. A database isn't a security but an entry in the right database, in the right place, might be. It seems to me all it would do is keep smart contracts from being securities simply because they use Ethereum—if they are, or create, securities, I see no reason why those would be any harder to regulate than any others.
> unless Congress were to pass a law to grant more authority, the SEC would have almost no ability to regulate cryptocurrency as they would have no ability to define cryptocurrency as a form of "security"
This is a fringe theory no administrative lawyer backs. Neither, based on crypto’s lobbying of the Congress, do those with influence in crypto.
Ripple’s case is narrow. This legal theory sounds like it’s being pitched by someone making a “times are about to change” pitch.
The SEC is in tough position. Either elon musk can tweet random stuff as personal opinion, or a speech given by the SEC chair has legal standing. I'm watching with popcorn.
The SEC is basically trying to argue that the speech was personal opinion (and the speech said that ETH was not a security), but Ripple alleges that the speech, though perhaps not an official statement, was much more than a personal opinion. We now know the SEC lawyers were involved in writing the speech, which is making life difficult for the SEC. This is also why the SEC is being far more careful now and is saying only BTC is not a security, but that ship may have sailed.
It's being called the Crypto Trial of the Century. A win for Ripple on the SEC's slip-up could mean the SEC is powerless to intervene in most crypto markets. A win for the SEC would result in mass regulation.