Regulation Through Litigation: A Call for Common Sense for the SEC

The current approach of the SEC, particularly under Gary Gensler, appears to lean heavily towards 'regulation through litigation,' creating barriers for companies looking to issue tokens. The regulatory process surrounding token releases is overly complicated and costly, posing challenges for small businesses with limited revenue. Potential issuers face a convoluted registration system, often reduced to vague classifications like 'other,' hindering their ability to comply. There is a lack of clarity in defining what constitutes a security, especially in comparison to established practices such as stock lending. The absence of an accessible accreditation test for investors further complicates compliance, as potential token issuers are left without a clear path to navigate registration. A more logical approach could involve simplifying the registration process, allowing companies to engage with qualified investors, and establishing clearer guidelines that foster innovation rather than litigation.