The brokerage regulations are just common sense and it would be a shame if they got tied into battles about whether token XYZ is a security or not.
An investment contract exists if there is an "investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others." - US vs Howey.
The "oh, but crypto is different" argument doesn't fly any more. Not since FTX.
You can still watch "Don't be like Larry", FTX's Super Bowl ad.[1]
Wasn't trying to make value judgements on whether anything is a security, just was wondering if it's how US crypto exchanges could operate in this weird legal grey zone
I think this is the major argument the SEC has that crypto shouldn't be regulated. Without anything underneath it, crypto is by its nature by more volatile - it can increase by 1000 fold in a minute but can also drop to nothing.
If regulated, more people would be drawn to it and any large losses could cause contagion in the rest of the market - people lose a lot on their crypto holdings so sell some of their bonds/stock in a hurry, which lowers the price across the market. Crypto has had several 2008 style crashes and is likely to have more but as yet they haven't effected the rest of the market/economy.
Maybe also because at moment crypto has no value/use for the economy.
You can still lose money because something you bought went down. But you don't lose assets some broker was just holding for you.
Japan does it this way, since the Mt. Gox episode. FTX Japan users are getting their assets back.
The SEC has the authority to do this right now. They won a lawsuit back in November. They've been holding off on bringing the hammer down on unregistered crypto securities that hadn't been shown to be frauds yet. They have no reason to hold back any more.