Judge Bibas’ concurring opinion in Coinbase v. SEC, No. 23-3202 (3d Cir. 2025), is also notable for his assessment of Gensler’s actual motive—a de facto ban on crypto. In line with the industry view, he wrote that "the SEC has sidestepped the rulemaking process by pursuing a de facto ban through enforcement instead,” and then mused, “One might wonder if an agency whose mission is maintaining fair, orderly, and efficient markets is authorized to ban an emerging technology.” Good question. The Court did not address that issue, as it was not properly before it. But I’ll share my view: It is not the prerogative of a small group of regulators to snuff out an entire industry, especially not one that aims to redesign the global financial system, the Internet, and money in a way that provides greater choice, independence, and opportunity for all. That would be an exercise of far too much power by an unaccountable few. In short, Gensler set a very dangerous precedent with his ill-conceived campaign to kill crypto in the U.S.

In case you missed it, Judge Bibas of the U.S. Court of Appeals for the Third Circuit recently encapsulated the reason for my industry’s fury against the Gensler-led SEC in three concise sentences. The opening paragraphs of Coinbase Inc. v. Securities and Exchange Commission, No. 23-3202 (3d Cir. Jan 13, 2025), frame the issue in the case: “Coinbase … petitioned the Securities and Exchange Commission (SEC) to promulgate rules clarifying how and when the federal securities laws apply to digital assets like cryptocurrencies and tokens. Coinbase argued in its petition that the existing securities-law framework does not account for certain unique attributes of digital assets, which make compliance economically and even technically infeasible…. [¶] The SEC denied Coinbase’s rulemaking petition. In a single paragraph, it explained that it disagreed with the petition’s concerns; that it had higher-priority agenda items—namely, everything else it was doing….” The Court held that the SEC’s terse response was not sufficiently reasoned and, thus, was arbitrary and capricious. That holding is not at all surprising. More significant is Judge Bibas’ concurring opinion in which he outlines “a constitutional issue that … lurks beneath” this holding. In Judge Bibas view, the SEC’s “haphazard enforcement strategy” targeting “entities that are trying to follow the law” (his words, not mine) raises due process concerns, which he summarized as follows: “The SEC repeatedly [sued] crypto companies for not complying with the law, yet it [did] not tell them how to comply. That caginess creates a serious constitutional problem; due process guarantees fair notice. “[R]egulated parties should know what is required of them so they may act accordingly ….”

@beardmars This is what makes Gemini great.

RT @beardmars: Great post (if you’re not familiar with Paul’s essays, go on his site and read a bunch! Some gems in there). Two things from…

For those who don’t know, this book is an absolute must read for anyone wanting to understand the digital asset space. And it should be read more broadly too, as it sheds important light on innovation in general.

RT @omsantarelli: Kent and S 3rd in Williamsburg is the intersection where art becomes brand. The future is being built today https://t.co…

@JackBaughman27 I agree with @JackBaughman27 that we have lost the plot entirely when it comes to regulation. This explains why we are witnessing such a strong a backlash. Regulation is indeed important. But the rules have to be rational--and rationally applied. +1 for a "single action" rule.

RT @JackBaughman27: There needs to be a “single action rule. Right now, when something goes wrong you can be investigated by multiple feder…

@JackBaughman27 Yes, the broader point is that regulators should not be able to decide which industries can and cannot use the US dollar.

RT @JackBaughman27: People need to understand just how wrong this was. This is unelected bureaucrats picking winners and losers: choosing w…

@iampaulgrewal Well said. Totally agree.

RT @iampaulgrewal: Law abiding American businesses should be able to access banking services without government interference. The incoming…

Well done Coinbase in aggressively pursuing their FOIA action against the FDIC. That federal regulators engaged in a secret and concerted effort to de-bank crypto can no longer be doubted.

RT @CoinDesk: JUST IN: U.S. banks were told to keep their distance from crypto, according to @FDICgov letters that @coinbase execs argue ar…

News that the White House has tapped Paul Atkins to lead the SEC and @DavidSachs to serve as A.I. & Crypto Czar is so very welcome. As with many of our peers, @gemini has been asking federal regulators to engage in a dialogue about the future of crypto for some time now. That sort of constructive engagement has been part of our company’s DNA since the start. Recall that @cameron and @tyler were part of the conversation in 2014 when @BenLawsky was fashioning the BitLicense regime in New York. But for the past several years, federal regulators have refused any discussion with our industry, opting instead to pursue a disastrous regulate-by-enforcement approach. At long last, a rational conversation about crypto can be had.

RT @tyler: We believe in a better future @Gemini and we're here to help build it. Onward! 🚀

Now that Washington is turning the page on crypto, it is important to take stock of the last four years and think boldly about what comes next. Over the last four years, a small group of regulators in Washington forced wondrous innovation in the digital asset space through a gauntlet. On the one side were a set of securities laws and regulations fashioned in and for another era. Federal securities regulators knew there was no way for our new industry to comply with these anachronistic rules. Yet they refused to engage in a constructive dialogue about how to adapt them for the modern era. On the other side of the gauntlet, federal banking regulators tried to debank crypto—operation Chokepoint 2.0. The obvious goal was to kill crypto and then fold the remnants into tradfi—with the remnants being blockchain technology and the few digital assets that happened to mature into “digital commodities” before the gauntlet was put in place. Nobody should be surprised that these cynical and regressive policies have spawned a massive backlash. Moving forward, the first question to be asked is this: Should the future of crypto policy be framed around an 80-year-old decision about orange groves in Florida? Clearly not. The Howey test has outlived its utility, at least as it applies to the digital asset space. More broadly, labelling some digital assets as “digital securities” and some as “digital commodities” misses the mark. Those labels are rooted in a historical regulatory paradigm that fails to account for crypto’s unique attributes. Worse, they lead some to the conclusion that the SEC and CFTC should share jurisdiction over crypto. Such a model would stifle innovation. This new technology needs a new set of rules. And those rules should be enforced by one primary federal regulator—not two. The lynchpin of the American economic success story has been our ability to innovate at speed. Let’s come together to keep pace with that noble tradition. We need to abandon prior attempts to shoehorn crypto into a regulatory paradigm designed in and for another era. The promising innovation unfolding in the digital asset space warrants an altogether new regulatory approach. Washington should write from a clean slate.