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Attorney John Deaton says that he believes it’s not beyond the SEC to rule that Bitcoin is a security, despite previous indications that the top crypto was exempted.
The crypto lawyer says that the SEC has been using dangerously broad language when dealing with XRP, a token it has been fighting in court to be deemed a security for three years.
The US Securities and Exchange Commission has been known to be trigger-happy when it comes to cryptocurrencies, with the XRP community familiar with the agency’s tactics all too well. However, the two cryptocurrencies that have been assumed to be safe are Bitcoin and Ethereum. But what if the SEC turns around and goes after BTC, deeming it a security? According to renowned crypto attorney John Deaton, this absurd notion can’t be ruled out just yet.
The SEC has been cracking on crypto for years, and while the leadership has changed, its mission hasn’t. The only two tokens exempted by former chairman Jay Clayton in 2019 were Ether and BTC. However, when current chair Gary Gensler took over, he turned against Ether as well, stating that “everything else other than Bitcoin is a security.”
But according to Deaton, a US lawyer deeply involved in the Ripple vs SEC case, even BTC might not be safe. Deaton was responding on X to Joe Carlasare, another crypto lawyer who revealed that the SEC insisted on BlackRock including a “kill switch” section on concerns over what would happen if BTC was deemed a security.
The S-1 filing by BlackRock notes, “Any enforcement action by the SEC or a state securities regulator asserting that bitcoin is a security or a court decision to that effect would be expected to have an immediate material adverse impact on the trading value of Bitcoin, as well as the shares.”
This kind of language, Deaton notes, affirms what many have feared for years—that even Bitcoin isn’t safe from being declared a security by the SEC.
Is Bitcoin a Security?
In his response, Deaton recounted how he has been warning other tokens, including Bitcoin and Ether that nobody is safe from the SEC.
When the SEC was cracking down on XRP, Deaton warned that the agency “was using dangerous and grossly overly broad language when discussing XRP or any other token.”
He added:
I said, as absurd as it sounds, I wouldn’t rule out the SEC attempting to claim BTC was a security.
He added:
In the Ripple case, the lawyers for the SEC stated on the record that the Commission had not taken an official position on Bitcoin or ETH, despite SEC senior staff (including the Chairman) saying Bitcoin wasn’t a security.
Deaton believes that as absurd as it sounds, it’s not beyond the SEC to go after Bitcoin for being a security. Declarations by senior executives, including two chairmen, that it’s not a security can’t be taken as legally binding. After all, ex-chair Clayton had cleared Ether by word of mouth, only for his predecessor Gary Gensler to come in and declare that ETH isn’t safe either.
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