In general, "stop or we're suing" is a reasonable thing for a regulator to say. But in this particular case "every cryptocurrency is a security, except Bitcoin" makes zero sense. Why wouldn't Bitcoin be a security?

It would make infinitely more sense if they said "Going forward, our interpretation will be that all cryptocurrencies are securities, and you'll need to become a real brokerage/exchange. Do this or we're suing." That would provide space for reasonable people to disagree, work it out in the courts, lobby Congress to legislate around the topic, etc.

But this version is non-sensical -- I simply can't imagine any reasonable persons would ever come to a meeting of the minds that Ethereum is a security but Bitcoin is not a security.

I agree. The only difference I can see is that Bitcoin never had the crazy fund-raising schemes and marketing blitzes that a lot of alt coins had. Same with the original ETH.

A federal judge recently ruled that XRP was a security when sold in some contexts but not others. And what coinbase is doing (at least with their basic trading platform, I know they have more questionable stuff going on as well) sounds like it wouldn't be a security for any coins.

> The court found that the “Programmatic Sales” did not satisfy Howey’s third prong because such buyers could not reasonably have expected that Ripple would use the proceeds of the sales to improve the XRP ecosystem and thereby cause an increase in the price of XRP. Citing SEC v. Telegram Group Inc., the court stated that this inquiry turns on the “promises and offers made to investors” and not each buyer’s motivation, making the blind bid/ask aspect of the transactions a key consideration. Ripple did not make any promises or offers because it did not know who was buying the XRP, and the purchasers did not know who was selling it.

https://www.mondaq.com/unitedstates/fin-tech/1348902/sdny-ru...