A few years before that, according to Axios, “Fourteen dotcom companies advertised during the 2000 Super Bowl, most of which are now defunct.”[1] I know many in the audience may just have been young children at the time, but the internet was relatively new back in 2000. The dot-com bubble burst, though, created significant tremors in our markets.

Ads, thus, don’t equal credibility. In crypto, there is lots of innovation, but plenty of hype. As in other start-up fields, many projects likely could fail. That’s simply part of the entrepreneurial spirit in the U.S.

The SEC’s remit is overseeing the capital markets and our three-part mission: protecting investors, facilitating capital formation, and maintaining fair, orderly, and efficient markets.

Sec scrutinizes nft market over illegal crypto token offerings

The three largest stablecoins were created by trading or lending platforms themselves, and U.S. retail investors have no direct right of redemption for the two largest stablecoins by market capitalization. There are conflicts of interest and market integrity questions that would benefit from more oversight.


Then, thirdly from a policy perspective are all the other crypto tokens. The fact is, most crypto tokens involve a group of entrepreneurs raising money from the public in anticipation of profits — the hallmark of an investment contract or a security under our jurisdiction.
Some, probably only a few, are like digital gold; they may not be securities.

Sec scrutinizes nft over crypto token

Currently, the venues that the SEC oversees solely trade securities. Thus, I’ve asked staff to consider how best to register and regulate platforms where the trading of securities and non-securities is intertwined. In particular, I’ve asked staff to work with the Commodity Futures Trading Commission (CFTC) on how we jointly might address such platforms that might trade both crypto-based security tokens and some commodity tokens, using our respective authorities.

The third area is around crypto custody.
Unlike traditional exchanges, currently centralized crypto trading platforms generally take custody of their customers’ assets.

Department of the Treasury and the Department of Justice; and about financial stability, which is important to all financial regulators.

There’s no reason to treat the crypto market differently just because different technology is used. We should be technology-neutral.

So I’d like to mention three areas related to the SEC’s work in this area: platforms, stablecoins, and crypto tokens.


First are the crypto trading and lending platforms, whether they call themselves centralized or decentralized (DeFi).

These platforms have scale, recently trading crypto worth more than $100 billion a day.[2]

The crypto market is highly concentrated, with the bulk of trading taking place on only a handful of platforms.

Thank you. It’s great to be with you all at this event, particularly as the University of Pennsylvania is my alma mater. I was over at Wharton, and what I knew of the law school is that the library stacks were a great place to study. It was so quiet there, though I don’t know if that’s still the case.

As is customary, I’d like to note that my views are my own, and I’m not speaking on behalf of the Commission or SEC staff.

Today, you’ve invited me to talk about the roughly $2 trillion crypto markets.

In February, you all might have noticed Super Bowl ads for several crypto platforms.
This wasn’t the first time we’d seen some new innovations getting air time on the biggest TV event of the year.

Seeing these ads reminded me that, in the lead-up to the financial crisis, subprime lender AmeriQuest advertised in the Super Bowl. It went defunct in 2007.

Justin Bieber joined the Bored Ape Yacht Club back in January, after purchasing an NFT from the collection for 500 Ethereum, or $1.5 million. Hours before his purchase, another wallet owned by the creators of another NFT collection, inBetweeners, dropped about 916 Ethereum into Bieber’s — which experts say raised questions about whether Bieber paid for his ape with money received from an undisclosed endorsement deal.

Asked why the 916 Ethereum was transferred, a spokesperson at inBetweeners said Bieber was an owner in the project and that the Ethereum represented his proceeds from the “mint,” or the process of publishing NFTs on the blockchain. A representative for Bieber declined to comment.

Madonna entered the metaverse last month, acquiring a Bored Ape NFT worth more than $500,000.

I’ve asked staff how to work with platforms to get them registered and regulated and best ensure the protection of customers’ assets, in particular whether it would be appropriate to segregate out custody.

Further, unlike traditional securities exchanges, crypto trading platforms also may act as market makers and thus as principals trading on their own platforms for their own accounts on the other side of their customers. I’ve thus asked staff to consider whether it would be appropriate to segregate out market making functions.

As it relates to crypto lending platforms, we recently charged BlockFi with failing to register the offering of its retail crypto lending product, among other violations.[6] The settlement made clear that crypto markets must comply with time-tested securities laws, such as the Securities Act of 1933 and the Investment Company Act of 1940.

Ripple confirmed that it is interested in exploring growth opportunities in the NFT market and has plans to integrate NFT support into the XRP Ledger. It also revealed partnerships with major brands such as Lotus Automotive and the Balmain fashion brand to roll out their NFTs on XRPL.

Ripple’s expanded scope

One of the most interesting aspects of the report is the reveal that Ripple has teamed up with FLUF World to develop a new blockchain called Root Network. This network will also be integrated with the XRPL and will use XRP for gas fees.

This kind of utility and growth will boost XRP’s demand and price action.

XRP has been stuck in a ranging performance since mid-June.

Our laws have been amended many times since then, Congress has painted with an even wider brush, and the Supreme Court has weighed in numerous time. They’ve all said, basically, to protect the public against fraud, to protect the public against scammers, people raising money from the public had to register and make basic disclosures with a cop on the beat: the SEC.

You might wonder: how might a crypto token be a security?

The Supreme Court’s 1946 Howey Test, which was about orange groves, says that an investment contract exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.[9]

My predecessor Jay Clayton said it, and I will reiterate it: Without prejudging any one token, most crypto tokens are investment contracts under the Howey Test.

Similarly, the top five DeFi platforms account for nearly 80 percent of trading on those platforms.[4]

Furthermore, these platforms likely are trading securities. A typical trading platform has dozens of tokens on it, at least. In fact, many have well in excess of 100 tokens. As I’ll address later, many of the tokens trading on these platforms may well meet the definition of “securities.” While each token’s legal status depends on its own facts and circumstances, given the Commission’s experience with various tokens that are securities, and with so many tokens trading, the probability is quite remote that any given platform has zero securities.

Thus, I’ve asked staff to work on a number of projects related to the platforms.

First is getting the platforms themselves registered and regulated much like exchanges.

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