Yes, that's the explanation. It still does not make the US legal system look very good. There is a total lack of legal certainty. Even some members of the SEC find the way crypto is handled by the US authorities questionable:

https://www.cnbc.com/2023/02/09/sec-commissioner-breaks-with...

> It still does not make the US legal system look very good.

Why?

People can disagree on their opinion about something. Usually that gets settled in court unless new legislation is enacted that addresses the matter specifically. This is how each and every societal change is dealt with and around the change itself you'll see a bunch of institutions either wash their hands of it or claim it as their own depending on their mandate, understanding of the matter and capacity.

For instance: the oil crisis led to the creation of the Department of Energy. Prior to that there wasn't a really big need but if something threatens the economy or the stability of the USD then you can expect legislators to react. Sooner or later this will be settled and then the transition period is over by definition. And it's very well possible that some or even all of this will be declared illegal.

A good legal system provides legal certainty. It has clean and concise laws that are straight-forward to apply. In case of uncertainty, the responsible authorities should provide guidance on what they believe is the right interpretation. None of this has happened in the case at hand. The applicable (?) laws are not clear and the responsible authorities refused to provide guidance. This is poison for innovation and entrepreneurship as it makes doing business in the US unnecessarily risky. Resolving these questions in court should only be the measure of last resort as this process is slow and costly.

There is a good reason that these things don't move on a dime: you need to get them right. And as the underlying tug-of-war between the two main agencies shows: it isn't always clear-cut or simple. Not everything can be solved by a pull request or an over-the-air update, legal systems evolve and this is by design not a fast process.

Effectively this means that technology will always be able to outrun legal systems, for a little while anyway and that no legal system is ever a perfect match for the society it models and governs. This is not normally considered a problem.

No, a good legal system cannot be outrun by technology. A good legal system provides sound foundations based on principles. Fraud is fraud, regardless of whether it is committed offline or online. Just like source code, legal code can be more or less well-designed, and it can yield more or less desirable outcomes. And in this case, the outcome the US legal system produced was much worse than "not perfect". The law failed to provide legal certainty and the authorities failed to provide clarity as well. Let's hope the courts will do their job -- a process that unfortunately can take many years.

> No, a good legal system cannot be outrun by technology.

This is not a productive line of thought.

No, it is very productive. From this principle, one can derive many important properties of an optimal legal system, most notably that laws should be technology-neutral. If a law needs to be changed every ten years, then it is not a very well-designed law.

I don't really have a horse in the race here, but I'll note that SEC commissioners are appointed by the president, so it's not surprising that they have different opinions if they're appointed by different parties. Gary Gensler is the chair right now, he is very anti-crypto. Hester Pierce is a republican and the republican-led SEC had a much more wait and see approach than Gensler does. (Arguably, you could say "we saw" after the latest crypto crash, but I still have a feeling they'd be less adventurous legally)