The US Securities & Exchange Commission under Chairman Gary Gensler wants to expand the Howey test, adding more digital assets to its list of “securities.”

John Deaton, XRP’s lawyer in SEC v Ripple, warns that the SEC is even claiming that when someone buys a token, even with 100% intent for use, that it can  “objectively be said that you COULD also expect a profit – it’s a security.”

John Deaton, XRP holders’ lawyer in the SEC Vs Ripple lawsuit said that Crypto traders need to be aware of the commission’s recent activities. He mentioned the latest argument made by the commissions in the summary judgment against the LBRY.

He claims that SEC chair Gary Gensler is unlawfully trying to expand the law.

Deaton is hardly the first and hopefully not the last to warn about the SEC’s heavy-handed desire to bring crypto under its regulatory aegis. The SEC is bringing arbitrary rules to the crypto space and engaging in dangerous, innovation-killing regulation by enforcement at a time when the industry is still recovering from the chaos of the last 10 months. 

We’re not normally proponents of legislative action, but Congress can and should act to rein in the SEC before it does more serious damage to the industry.