OpEd: Regulatory Power. Crypto May Only Be the Beginning.


Power is like an addictive drug. Regulatory power is a drug laced with steroids. The lust for power and control is certainly nothing new, but it seems to be reaching new levels lately. Especially over at the SEC. Cutting right to it, Securities and Exchange Chair Gary Gensler seems to be hitting the power drugs. Rather than being just a regulator, Mr G. seems to want to totally control all things crypto (or destroy it) even before they can actually agree exactly what crypto is. But this may only be the beginning.

Nobody will dispute (well there’s always one) that defined regulations for crypto are sorely needed. Indeed, regulations in ANY sector are necessary. But, there is “overkill” as well. Again, Mr G. and the SEC see an opening to not just regulate but control where crypto (digital assets) will be regulated, what exchanges may be “acceptable'” and even require crypto to comply with political initiatives. Again, looking back, the SEC had regulatory authority during the “penny stock” era, the “dot com” bubble and even products offered right up the the 2008/9 financial crisis. Sorry investors. The SEC’s regulatory track record isn’t “the finest” but their control keeps increasing. Crazy!

So once the “taste” of feeling power and control sinks in, where might it spread? Well, if the SEC’s Mr G. decides to “branch out,” maybe he will decide real estate needs to be regulated (I mean, MAYBE?). If you watch HGTV at night (sadly, we do) where house hunters search for the “perfect” home, the real estate agents are always stressing the investment potential. The opportunity to have that home increase in value. Hmmmm! Selling investments? Sounds like a job for the SEC. Now I realize real estate may not satisfy the Howey Test as a security, but crypto may not either. If the SEC wants to regulate and control, definitions sure won’t stand in the way. Watch out real estate agents.

Or, stretching further, how about regulating and controlling…….space. Yes, all of space (the area above earth). An article in SpaceNews (6/10) headlined “Should the FAA regulate all space activities?” Really? The same agency in charge of all air traffic in the Northeast corridor? In charge of space?? OK then. Again quoting from SpaceNews;

“The Outer Space Treaty (OST) [who knew?] requires nation-states to provide “authorization and continuing supervision” of the activities of their nationals in space. In recent months the National Space Council (NSpC), chaired by Vice President Kamala Harris, has asked federal agencies for their opinions on which agencies or departments should have this role for in-space activity. Here, “in-space activity” is basically everything other than launch and reentry operations.”

If the FAA was selected it would assume the responsibility of “supervising” (i.e., regulating) all commercial activity in space, not just transportation through Earth’s atmosphere to and from space as is now the case. OMG! The FAA??

Maybe the SEC is just the first stop for Mr. G. First crypto, then real estate and then…..SPACE! Perhaps Chairman Gensler is really Darth Vadar? Remember this famous quote;

“You don’t know the power of the dark side!”