Crypto complex recalls 1920s stock market with ‘rampant speculation, manipulation and

The report, previewed exclusively by MarketWatch and authored by Todd Phillips, CAP’s director of financial regulation and corporate governance, argues that SEC Chairman Gary Gensler has the law on his side when he has said that the vast majority of cryptocurrencies being traded today are unregistered securities and that their issuers and brokers and exchanges who trade them are violating federal law.

“The SEC is in a pretty difficult situation here, because they are issuing guidance explaining what the law is,” Phillips said in an interview with MarketWatch. “They are having meetings with companies, telling them what the law is and they are bringing lawsuits based on what the law is and the industry doesn’t seem to care.”

Though CAP describes itself as nonpartisan, it “has strong ties to the Democratic Party establishment,” according to Influence Watch, and is led by by Patrick Gaspard, a former high-ranking official in the Obama administration. The report could be the latest sign that the debate over crypto regulation is taking on a partisan valence.

This dynamic was on display at a Senate Banking Committee hearing last month, when Republicans took Gensler to task for not providing the crypto industry with enough clarity as to what makes a digital asset a security and therefore under SEC jurisdiction.

Republican Sen. Pat Toomey of Pennsylvania has been increasingly critical of what he calls the SEC’s “strategy of regulation by enforcement,” or the practice of bringing enforcement actions against crypto issuers without “proactively [providing] rules of the road to the industry,” according to a September letter the ranking Republican on the Senate Banking Committee sent to Gensler. In August, the ranking Republican on the House Financial Services Committee, North Carolina Rep. Patrick McHenry, accused the SEC Chair of attempting a “power grab,” in asserting his agency’s jurisdiction over digital asset exchanges.

Democrats have largely come to Gensler’s defense on the issue, who has argued when Congress passed U.S. securities laws they “painted with a broad brush,” and that its definition of a security “included about 35 different things.”

Some of the most high profile Democratic lawmakers sitting on committees with jurisdiction over financial markets and crypto have called for the SEC and other financial regulators to get more aggressive with the crypto industry.

In July, Sen. Sherrod Brown of Ohio, Democratic chairman of the Senate Banking Committee called cryptocurrencies “funny money” that was putting…