Foley & Lardner LLP Partner Patrick Daugherty is quoted in the TruthDAO article, “Crypto Community to Regulators: Clarity Urgently Needed – Now,” discussing the U.S. Securities and Exchange Commission (SEC)’s pattern of regulation by enforcement amidst an absence of clear guidance regarding the crypto industry.
Daugherty argues recent SEC messaging on the topic is not the same as clear, actual rules. He describes how four years ago, he approached the then deputy director of the SEC’s Division of Corporation Finance to emphasize that the legal community needed guidance about when digital assets were considered securities. A few months later, a speech by the then SEC’s division director suggested that the crypto ecosystem had become decentralized to the point that it was not considered a security.
Daugherty said that speech gave the industry “pretty good guidance of what to look for in trying to classify a token as a commodity or a security,” however it has now become a point of contention in the SEC’s recent lawsuit against Ripple Labs, Inc. over whether their crypto token XRP is an unregistered security.