Blockchain Association Questions SEC Chair’s Authority in Crypto Asset Decisions

Jake Chervinsky, a well-known lawyer and Chief Policy Officer at the Blockchain Association, has raised concerns about the U.S. Securities and Exchange Commission (SEC) Chair, gary gensler gary gensler Gary Gensler is the chairman of the U.S. Securities and Exchange Commission (SEC). His studies in finance and blockchain at MIT have helped him develop U.S. cryptocurrency regulations and policies. Quick Facts Full name Gary Scott Gensler Birth 18-10-1957, Baltimore, Maryland, United States Nationality American Education MBA from the University of Pennsylvania Marital status Married to Francesca Danieli (1986-2006) Net worth Estimated $100 million   Gensler has advocated for enhanced supervision of digital assets, seeking to regulate cryptocurrencies similar to securities. His work at the SEC has focused on safeguarding investors, regulating crypto exchanges, and establishing stablecoin policies.   Gary Gensler - Career Highlights 1997 – Became Assistant Secretary of the Treasury. 2009 – Led CFTC, regulating financial derivatives post-2008 crisis. 2018 – Taught blockchain and crypto at MIT. 2021 – Appointed SEC Chairman, focusing on crypto regulations. 2022 – Proposed stricter rules for crypto exchanges. 2023 – Took legal action against major crypto firms. 2024 – Advocated for stronger stablecoin and DeFi regulations.   Gary has collaborated with multiple lawmakers in formulating crypto policies. Even with disagreements with crypto investors regarding crypto policies, he continues to be a key player in the changing dynamic between regulatory frameworks and blockchain advancement.   Awards & Recognitions of Gary Gensler Year Institution  Description 2009 U.S. Treasury Financial Regulation Leader 2018 MIT Blockchain & Crypto Educator 2021 SEC SEC Chairman Overseeing Crypto Policies 2023 Bloomberg Most Influential Regulator in Crypto 2024 Forbes Top Policy Maker in Digital Assets   Useful Links to Connect With Gary Gensler Platform Link X (formerly Twitter) twitter.com/GaryGensler CFTC website Chairman Gary Gensler   Chairman , on his stance regarding digital assets. Chervinsky took to Twitter to express his strong disagreement and called for Gensler’s recusal from any enforcement decisions related to digital assets.

Gensler’s Perspective: All Digital Assets are Securities

The controversy revolves around Gensler’s belief that all digital assets, apart from Bitcoin, should be classified as securities. Since his appointment as the SEC Chair, Gensler has made no secret of his conviction, which Chervinsky claims amounts to prejudgment. By expressing his views so openly, Chervinsky suggests that Gensler has compromised his position as a neutral arbiter in the enforcement process known as the “Wells process.”

The Wells process serves as a formal procedure for SEC enforcement actions. It is designed to allow the SEC Commissioners to act as impartial judges, reviewing evidence and arguments presented by both the SEC staff and the enforcement targets before making any enforcement decisions. However, Chervinsky argues that Gensler’s preconceived notions about digital assets undermine this crucial process.

Chervinsky’s Argument: A Need for Fairness and Impartiality

By refusing to analyze the “facts and circumstances” surrounding each case, Gensler has, according to Chervinsky, invalidated the process, violating the law that demands recusal when an SEC Commissioner has preemptively adjudged a case.

The issue of prejudgment goes beyond individual cases, Chervinsky argues. If Gensler continues to participate in enforcement decisions, his bias could taint the entire enforcement process. To avoid the potential repercussions, Chervinsky insists that Gensler should recuse himself from all future decisions involving digital assets. Furthermore, any previous enforcement actions in which Gensler was involved should now be invalidated.

A Plea for Legal Advice

Chervinsky’s argument has stirred up the digital asset industry, potentially providing a new line of defense for anyone dealing with an SEC investigation or enforcement action. He suggests that anyone in such a situation should consult with their legal counsel to discuss the possibility of raising the issue of Gensler’s recusal with the SEC or a federal court.

The paper that Chervinsky refers to, while not legal advice, provides further context for his argument. It underlines the importance of preserving the fairness and impartiality of the SEC’s enforcement function, a vital component of the agency’s mission.