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Speaker 1: In April of last year, President Joe Biden announced new

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Speaker 1: rules meant to crack down on so called ghost guns

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Speaker 1: that can be built at home.

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Speaker 2: All of a sudden, it's no longer a ghost. It

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Speaker 2: has return address. It's going to help save lives, reduce crime,

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Speaker 2: and get more criminals off the streets.

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Speaker 1: The rules require sellers to run background checks and include

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Speaker 1: serial numbers on the gunkits. Last month, a federal judge

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Speaker 1: in Texas struck down those regulations, but this week, by

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Speaker 1: a five to four vote, the Supreme Court is allowing

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Speaker 1: federal officials to resume enforcing the rules while litigation plays out.

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Speaker 1: Joining me a Second Amendment law expert John Donahue, a

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Speaker 1: professor at Stanford Law School, it seems like there's a

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Speaker 1: massive amount of litigation over gun restrictions.

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Speaker 3: So, as is always the case, there is this back

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Speaker 3: and forth between regulatory measures and industry response, and in general,

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Speaker 3: every restriction on weapons of any kind is being challenged

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Speaker 3: in federal court, and unfortunately, in my view, some of

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Speaker 3: the federal courts are trying to preempt the enforcement of

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Speaker 3: these measures. So the litigation is going on literally across

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Speaker 3: the country. It's, to my mind, very unfortunate that these

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Speaker 3: restrictions are being undermined by the federal courts.

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Speaker 1: What exactly is a ghost gun?

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Speaker 3: Ghost guns are essentially a name that refers to the

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Speaker 3: kits that one can buy online without going through any

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Speaker 3: sort of background check and allow one to make a

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Speaker 3: fully functioning weapon in a relatively easy fashion. It might

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Speaker 3: take you five or six hours to put a complete

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Speaker 3: coast gun together. But the thing that makes them so

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Speaker 3: attractive to criminals is that they bypass the normal requirements

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Speaker 3: of going through a background check when purchasing a weapon

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Speaker 3: and also eliminating identifying serial number that would be required

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Speaker 3: on a legally purchased gun through a normal gun seller.

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Speaker 1: So Texas Judge Ried O'Connor, the judge who ruled that

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Speaker 1: Obamacare was unconstitutional, struck down the regulations. What was his reasoning, So, it's.

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Speaker 3: Essentially this all out assault on the idea that the

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Speaker 3: government can restrict individual's ability to acquire weapons. And in

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Speaker 3: the ghost gun case, they were essentially saying that these

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Speaker 3: efforts on the part of the Biden administration to curtail

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Speaker 3: access to ghost guns was violating the Second Amendment, highlighting

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Speaker 3: the part of the Second Amendment that said the right

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Speaker 3: to keep in bear arms shall not be infringed, ignoring

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Speaker 3: the first part of the Amendment, of course, which refers

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Speaker 3: to a well regulated militia being necessary to a free state.

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Speaker 1: Were you surprised by the Supreme Court's decision to let

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Speaker 1: the regulations remain in place pending litigation, You know.

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Speaker 3: It wasn't surprising to me, because it does seem to

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Speaker 3: me that the issue of ghost guns is such a clear,

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Speaker 3: valuable governmental intervention that I thought even this Supreme Court

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Speaker 3: would have a hard time trying to stripe down these

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Speaker 3: sensible government restrictions. The only thing that did surprise me

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Speaker 3: a little bit was that it was only five to four.

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Speaker 3: I thought Kavanaugh would have joined this and at least

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Speaker 3: made it a six to three decisions. And it also

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Speaker 3: shows that we may not be out of the woods,

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Speaker 3: because this was a five to four decision saying, at

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Speaker 3: least at this point, we're not going to stop the

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Speaker 3: Biden administration. But it certainly wasn't guaranteeing that they wouldn't

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Speaker 3: try to stop the Biden administration later after more thorough

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Speaker 3: litigation on the issue.

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Speaker 1: Also this week, a three judge panel of the Ninth

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Speaker 1: Circuit found that thirty year ban on butterfly knives violates

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Speaker 1: the Second Amendment, and they based it on the Supreme

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Speaker 1: Court's new history and tradition standard. How did they come

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Speaker 1: to that decision?

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Speaker 3: This is a mind boggling decision. The first sentence starts

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Speaker 3: off saying something like, because this Hawaii restriction on these

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Speaker 3: type of knives violates the clear text of the Amendment,

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Speaker 3: it must be struck down. And it's almost extraordinary, I think,

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Speaker 3: to argue that butterfly knives could in any way advance

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Speaker 3: the interests of a well regulated militia. So it just

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Speaker 3: seems absurd on its face, both as a matter of

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Speaker 3: wise policy, but also just as a matter of interpreting

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Speaker 3: the Second Amendment. So I was very puzzled by the decision.

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Speaker 3: But again, unfortunately, many of the federal judges seem to

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Speaker 3: think that every restriction on guns of any kind be

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Speaker 3: struck down, and they're sort of advancing that mission whenever

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Speaker 3: they have an opportunity.

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Speaker 1: I mean, the Supreme Court Bruin case was about gun

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Speaker 1: regulations in New York. How did they say that this

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Speaker 1: same framework applies to butterfly knives.

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Speaker 3: It's interesting a number of years ago, the former Republican,

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Speaker 3: I should add. Supreme Court Justice John Paul Stevens said,

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Speaker 3: the single worst decision in his thirty four years on

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Speaker 3: the Supreme Court was the Heller decision, which is the

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Speaker 3: first time that the Supreme Court said, there is this

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Speaker 3: individual right under the Second Amendment to have a gun

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Speaker 3: in your home for personal defense. And that was almost

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Speaker 3: certainly wrongly decided, as John Paul Stephen said, but Bruin

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Speaker 3: has expanded the harm enormously because it not only struck

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Speaker 3: down this one hundred and nine year old New York

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Speaker 3: City restriction on carrying of gun and said that you

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Speaker 3: have this individual constitutional right to carry guns outside the home,

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Speaker 3: but it also sets forth a sort of bizarre framework

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Speaker 3: in which they said that all of the evidence that

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Speaker 3: New York brought forward showing that the restrictions reduced homicides

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Speaker 3: reduced violent crime were irrelevant. We didn't care what the

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Speaker 3: consequences were, because this is a constitutional right. And unless

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Speaker 3: you can show us some historical restrictions, you know, perhaps

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Speaker 3: going back to seventeen ninety one that are analogous to

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Speaker 3: the restriction that you're talking about now, we're just going

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Speaker 3: to say you cannot have that type of gun regulation today,

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Speaker 3: and so that's what the Hawaii decision picked up on.

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Speaker 3: I said, well, a butterfly knife is a weapon. The

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Speaker 3: Second Amendment refers to arms, and so we will extend

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Speaker 3: this conclusion to a restriction on butterfly knives. And because

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Speaker 3: we don't see any similar restriction on butterfly knives in

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Speaker 3: seventeen ninety one, you can't do it today. Makes no

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Speaker 3: sense in any customary interpretation of constitutional law or good policy.

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Speaker 3: But that's where we are.

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Speaker 1: Hawaii even pointed to statutes dating back to eighteen thirty

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Speaker 1: seven that regulated bladed weapons like booie knives, but the

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Speaker 1: panel said the state hadn't cited any statute which categorically

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Speaker 1: banned the possession of any type of pocket knife. You know,

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Speaker 1: the Ninth Circuit used to be a very liberal circuit,

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Speaker 1: but now it depends on the panel you get. And

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Speaker 1: in this case there were two Trump appointees and one

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Speaker 1: George W. Bush appointee. Do you think that Hawaii should

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Speaker 1: ask for an on bank.

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Speaker 3: Hearing, Yes, and even on bank hearing now you don't know,

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Speaker 3: because they actually don't take the entire Ninth Circuit for

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Speaker 3: on bomb, but they will select the portion of it,

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Speaker 3: and if you've got a bad draw, you could imagine

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Speaker 3: not prevailing on the en bomb. But I still think

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Speaker 3: that they should because it's an embarrassment for the federal

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Speaker 3: court to have such an unprincipled and unwise federal precedent.

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Speaker 3: So I'm hoping that they strike this down through the

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Speaker 3: unbanked proceeding.

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Speaker 1: So our trial and appellate courts around the country now

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Speaker 1: looking at modern day weapons and determining their legality by

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Speaker 1: century old statutes, Is that what it's come to.

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Speaker 3: Yeah, I mean, it's a bizarre process. Think about the

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Speaker 3: Brewing case where they struck down restrictions on carrying of guns.

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Speaker 3: Texas had a law from eighteen seventy one to nineteen

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Speaker 3: ninety five that prohibited carrying of guns and in Brewing.

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Speaker 3: They said, oh, well, that's a late statute, So certainly

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Speaker 3: that can't be relevant to whether there's a right to

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Speaker 3: carry guns because that was established way back in seventeen

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Speaker 3: ninety one. And so the Supreme Court, even when they

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Speaker 3: had long standing prohibition in the Brewing case that they

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Speaker 3: could have pointed to, said they're all irrelevant because they

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Speaker 3: came too late. So it's a very unwise standard for law, because,

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Speaker 3: of course, weaponry has come vastly more lethal and dangerous

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Speaker 3: in the last fifty years than it was way back

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Speaker 3: in seventeen ninety one. So it's a very troubling trend.

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Speaker 3: And I'm hoping in some of these really bizarre decisions

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Speaker 3: that are coming down, a Supreme Court will step in

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Speaker 3: and try to curb the enthusiasm that has developed among

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Speaker 3: basically Trump appointees and other very far right judges to

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Speaker 3: strike down every gun regulation.

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Speaker 1: And there's also a separate lawsuit challenging California's ban. Do

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Speaker 1: these depend on the type of weapons ban?

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Speaker 4: Now?

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Speaker 3: I think this panel that issued the decision in Hawaii

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Speaker 3: would ban every restriction on weapons practically across board. I

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Speaker 3: know that one issue that is being litigated very extensively

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Speaker 3: are assault weapons bands and bands on high capacity magazines.

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Speaker 3: And if you read the harder and enthusiasm that the

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Speaker 3: recent decision on the Hawaii case has for making the

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Speaker 3: Second Amendment this superpower to strike down government regulations, I

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Speaker 3: think all of those regulations would be struck down at

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Speaker 3: that panel work making the decision.

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Speaker 1: Thanks so much for being on the show. That's Professor

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Speaker 1: John Donahue of Stanford Law School. I note Michael Bloomberg,

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Speaker 1: the founder majority owner of Bloomberg LP, the parent company

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Speaker 1: of Bloomberg Radio, is a donor to groups that support

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Speaker 1: gun control, including Every Town for Gun Safety. The two

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Speaker 1: judges sit one floor apart in the Manhattan Federal Courthouse,

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Speaker 1: but they came to completely different decisions on cryptocurrency. The

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Speaker 1: crucial question is whether crypto is a security that can

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Speaker 1: be regular by the sec Judge Jed Raycoff found that

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Speaker 1: Terraform Lab's token was a security when sold to retail investors,

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Speaker 1: while Judge Anna Lisa Torres came to the opposite conclusion

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Speaker 1: about Ripple Labs token, dueling decisions that create more legal

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Speaker 1: uncertainty in the regulation of crypto. But when fighting the

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Speaker 1: sec Coinbase and other crypto companies appear to be sticking

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Speaker 1: with their argument that crypto is not a security, as

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Speaker 1: well as arguing that the Supreme Court's Major Questions doctrine

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Speaker 1: applies to the crypto industry. Another argument rejected by Judge

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Speaker 1: Raycoff joining me is securities law expert James Park, a

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Speaker 1: professor at UCLA Law School. The Supreme Court sort of

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Speaker 1: invented this Major Questions doctrine fairly recently explain.

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Speaker 4: What it is. Sure it is a recent doctrine at

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Speaker 4: least it's been emphasized recently in a few cases. And

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Speaker 4: my understanding of the doctrine is that it typically applies

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Speaker 4: when an administrative agency uses a questionable reading of a

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Speaker 4: statute to substantially increase its regulatory authority over what the

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Speaker 4: Court says is a significant portion of the American economy.

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Speaker 5: And the reason I think.

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Speaker 4: For the doctrine, according to the Supreme Court is that

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Speaker 4: administrative agencies have limited power. They're not in the US Constitution.

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Speaker 4: They only are delegated power when Congress passes a law.

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Speaker 4: And if the law is unclear, what the doctrine is

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Speaker 4: saying is that Congress should act to make it clear

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Speaker 4: that the agency has this power, rather than the agency

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Speaker 4: taking it upon itself to interpret the statute as giving

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Speaker 4: it expansive power.

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Speaker 1: Tara Labs was making the argument that crypto enforcement is

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Speaker 1: a major question and trying to get an SEC lawsuit dismissed.

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Speaker 5: Yeah, that's right.

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Speaker 4: They did raise that issue, and the judge in that case,

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Speaker 4: Judge Jed Raykoff, rejected the argument. And Judge Raykoff, as

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Speaker 4: you may know, is one of the most prominent federal

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Speaker 4: judges in the country and is regarded as having special

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Speaker 4: expertise in securities laws. So his decision is one that

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Speaker 4: will be influential. And I think the basic argument that

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Speaker 4: Judge Raycoff made, if I'm understanding it correctly, is that

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Speaker 4: in this case, the SEC is simply applying well established

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Speaker 4: disclosure requirement to crypto assets when they are security and

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Speaker 4: this is part of the bread and butter of what

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Speaker 4: the SEC does, and so it does not implicate a

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Speaker 4: substantial new authority or power over significant economic activity. That's

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Speaker 4: I think what Judge Raykoff says, and that's what he

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Speaker 4: said in his opinion in the Terraform case.

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Speaker 1: So Judge Rakoff said that crypto wasn't a major industry

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Speaker 1: and it would ignore reaction to put crypto on the

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Speaker 1: same plane of importance as the energy and tobacco industries.

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Speaker 1: But crypto advocates say it's a one trillion dollar industry

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Speaker 1: that's attracted investments from hundreds of millions of people globally.

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Speaker 4: Yeah, I think that's the argument that the defendants are

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Speaker 4: going to make, that the crypto industry will make that

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Speaker 4: this has the potential to be a transformative technology that

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Speaker 4: could reshape the economy.

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Speaker 5: And therefore it involves.

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Speaker 4: A significant amount of economic activity. I think the answer

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Speaker 4: on the other side, though, is that, you know, sure,

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Speaker 4: on paper, if you add up the value of bitcoin

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Speaker 4: and ethereum and some of the other crypto acids, maybe

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Speaker 4: it totals about a trillion dollars, but that's based upon

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Speaker 4: fairly speculative trading and perhaps potentially manipulation. Do we really

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Speaker 4: believe that these crypto.

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Speaker 5: Assets are worth that much?

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Speaker 4: I think the there are certainly questioned as to the

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Speaker 4: true value of these crypto assets.

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Speaker 5: Another point that.

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Speaker 4: Should be made is that the bulk of the value

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Speaker 4: of crypto is in bitcoin and ethereum, and a few

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Speaker 4: years ago the SEC explicitly said it did not consider

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Speaker 4: bitcoin or ethereum to be security. So it's not trying

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Speaker 4: to sert jurisdiction over the two crypto assets that comprise

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Speaker 4: the bulk of that one trillion dollars, and so the

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Speaker 4: remaining crypto assets, some of which the SEC is trying

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Speaker 4: to regulate the value is probably substantially smaller than you know,

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Speaker 4: trillion dollars, and so the SEC might argue that this

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Speaker 4: does not involve a major question, because it's really a

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Speaker 4: fairly small amount, and you know, even a trillion dollars

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Speaker 4: if you think about you know, the market capitalization of Tesla,

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Speaker 4: for example, is around a trillion dollars. That's a single

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Speaker 4: public corporation. Then the context of public markets thoughts and

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Speaker 4: on the trillion dollars, it's a lot, but it's killed

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Speaker 4: in comparison to the value of the markets that the

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Speaker 4: SEC has regulated for a long time.

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Speaker 5: So that would be the argument.

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Speaker 4: I think that the SEC is making on the other side,

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Speaker 4: that really the market is not as significant or strong,

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Speaker 4: and that the real value is speculative and it's really

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Speaker 4: guesswork as to whether or not this is going to

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Speaker 4: have any economic impact at all.

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Speaker 1: Is there a question as to whether the SEC can

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Speaker 1: regulate cryptocurrencies or whether it can regulate all digital assets.

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Speaker 4: I think the SEC has made it clear that they're

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Speaker 4: only trying to regulate those crypto assets that are security

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Speaker 4: that fall under the Howie test, and that's only a portion.

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Speaker 5: That is only a portion.

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Speaker 4: Of the crypto assets that are out there. I think

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Speaker 4: if the SEC was trying to regulate all crypto assets,

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Speaker 4: that could be potentially more problematic. But to the extent

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Speaker 4: that they are saying we are regulating only those crypto

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Speaker 4: assets that are securities, I think they're on firmer ground,

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Speaker 4: and I think the major difference between potential major questions

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Speaker 4: our argument in this case versus some of the ones

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Speaker 4: that have been discussed in prior Supreme Court cases is

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Speaker 4: that the courts can decide case by case whether a

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Speaker 4: crypto asset is a security or is not. And so

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Speaker 4: there's a natural check on the SEC's authority where you

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Speaker 4: know they're not going to be able to simply assert

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Speaker 4: authority over all crypto assets that they're not trying to

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Speaker 4: do so, and to the extent that they overreach and

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Speaker 4: they try to regulate some crypto assets that are not securities,

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Speaker 4: then litigation in the courts can check that potential abuse

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Speaker 4: of power.

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Speaker 1: There are dueling decisions by two Manhattan federal judges who

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Speaker 1: sit one floor apart in the Federal Courthouse, Judge Rakeoff

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Speaker 1: and Judge an Alisa Torres. They came to different conclusions

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Speaker 1: on whether crypto is a security when sold to retail investors,

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Speaker 1: and they both applied the same nineteen forty six Supreme

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Speaker 1: Court ruling.

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Speaker 4: It's a truly interesting set of decisions, and I can't

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Speaker 4: recall anything like this ever happening before, although I'm sure

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Speaker 4: it had. Where you have this initial decision in the

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Speaker 4: Ripple case, and it's said that in some circumstances Ripple

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Speaker 4: is not a security when it was offered and traded

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Speaker 4: in secondary market, and that was a loss for the SEC.

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Speaker 4: I don't think it was a loss, you know, that

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Speaker 4: was fatal to the SEC's position, but it was a

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Speaker 4: significant loss, and that could have been the only opinion,

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Speaker 4: substantial opinion on the application of the Howie pest for

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Speaker 4: a long time, because it takes a long time for

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Speaker 4: a case to be appealed, and it takes time for

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Speaker 4: the appellate court to issue a decision, So that could

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Speaker 4: have been the most significant precedent on the issue for

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Speaker 4: some time. And then just a few weeks later, Judge

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Speaker 4: Raykoff comes out with his decision which discusses the Ripple

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Speaker 4: decision and rejects this distinction between institutional investors who are

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Speaker 4: buying directly from Ripple and its founders versus the retail

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Speaker 4: investors who are buying on secondary markets. He says basically

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Speaker 4: that the marketing that was critical, the determining that this

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Speaker 4: was a security because there were basically statements saying that

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Speaker 4: there would be an expectation of profitability, that the price

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Speaker 4: would rise because of the efforts of pairform in Judge

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Speaker 4: Rakoff's case, and what Judge Racop said is that those

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Speaker 4: communications were distributed to both retail and institutional investors, and

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Speaker 4: so to draw a distinction between those two markets, according

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Speaker 4: to Judge Rakoff, that was not, in his view, a viable.

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Speaker 5: Distinction that could have been made.

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Speaker 4: And so we have competing decisions here to different views,

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Speaker 4: and we'll see what the second Circuit says at some

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Speaker 4: point that body that would resolve this sort of a split.

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Speaker 4: Judges in the Southern District.

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Speaker 5: Of New York.

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Speaker 1: These judges are district court judges, so they're on the

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Speaker 1: same level, so their opinion isn't binding on other district

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Speaker 1: court judges. But I'm wondering if, as you mentioned, Judge

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Speaker 1: Rakoff is one of the most respected federal judges in

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Speaker 1: the country. He's been on the bench for nearly thirty

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Speaker 1: years and is known for his expertise in securities law.

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Speaker 1: So I'm wondering whether his opinion carries more weight.

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Speaker 4: It has a special residence, I think, and I think

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Speaker 4: that's partly because of who judge Raykoff is. It may

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Speaker 4: also be because other judges find the reasoning to be persuasive.

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Speaker 4: And really, at the end of the day, I think

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Speaker 4: what district court judges are going to do is they're

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Speaker 4: not gonna say, well, this is a decision by this

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Speaker 4: judge versus another judge, because they are all great judges.

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Speaker 4: In my view, the Southern District of New York has

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Speaker 4: as good of judges as any in the district court.

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Speaker 5: And I think what they're.

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Speaker 4: Going to really look at very carefully is the reasoning

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Speaker 4: and the decide whether or not they agree with it.

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Speaker 5: And you know, judges could differ.

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Speaker 4: The Howie test is broad, but they may line up

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Speaker 4: in favor of one interpretation.

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Speaker 5: Over the other if there are additional.

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Speaker 4: Decisions that we see in the coming months or years.

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Speaker 1: So I'm a little confused, James. These companies like coinbase,

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Speaker 1: are they arguing the major questions doctrine and arguing that

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Speaker 1: crypto is not a security? Are they making both arguments?

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Speaker 4: Yes, that's right. These are both arguments that they're asserting,

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Speaker 4: and to some extent they are independent. Although you could

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Speaker 4: argue there is a relationship between the two arguments, you

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Speaker 4: could say that perhaps because of the ambiguity of the

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Speaker 4: definition of the security, that maybe it's not proper for

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Speaker 4: the SEC to take the position that it's taken, and

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Speaker 4: that it is essentially exploiting an ambiguous definition in order

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Speaker 4: to regulate substantial major questions. So there is a relationship

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Speaker 4: between the two arguments, but they're also both independent arguments.

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Speaker 4: And certainly the SEC has to prove in the coinbase

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Speaker 4: case that there were securities trading on that exchange, that

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Speaker 4: some of the crypto accids were securities, because the SEC

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Speaker 4: only has jurisdiction over a securities exchange. I mean, that's

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Speaker 4: why it's important in the coinbased case that the SEC

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Speaker 4: established that at least some of the crypto ascids trading

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Speaker 4: on that exchange were securities under the Howie pat.

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Speaker 1: Coinbase, which has cited the major questions doctrine in an

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Speaker 1: August fourth filing despite Judge Racoff's opinion, and is asking

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Speaker 1: another judge to dismiss an SEC lawsuit, and it's pointing

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Speaker 1: to the decision by Judge and Alisa Torrez and says

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Speaker 1: that Judge Rakeoff is wrong. So a third judge is

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Speaker 1: going to decide which judge is right in his or

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Speaker 1: her opinion.

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Speaker 4: Yes, I think that the judge will certainly put potentially

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Speaker 4: weigh in on the decision.

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Speaker 1: Now.

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Speaker 4: Another possibility, though, is that the judge may simply say

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Speaker 4: something like it's premature at this time. I can't decide

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Speaker 4: this particular issue on the pleadings alone. I want more information,

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Speaker 4: more discovery.

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Speaker 5: So it's possible the judge.

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Speaker 4: To avoid for a while deciding between these two competing interpretations.

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Speaker 4: But it's also very possible that the judge will look

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Speaker 4: at these two decisions and decide that she agrees with

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Speaker 4: one of them versus the other. That's one possibility. Another

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Speaker 4: possibility is that the judge in the coin base case

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Speaker 4: could craft her own approach and basically say, here's a

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Speaker 4: third way that these other two judges have overlooked. So

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Speaker 4: there are a number of possibilities as two to what

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Speaker 4: could happen.

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Speaker 1: Will you explain why it's so important for the crypto

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Speaker 1: industry to make this argument and to try to undercut

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Speaker 1: the SEC which is trying to police it.

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Speaker 5: Great question.

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Speaker 4: It is important because the SEC's position creates uncertainty in

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Speaker 4: this industry, creates uncertainty, and when there is uncertainty in

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Speaker 4: an industry, then investors are less willing to commit funds.

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Speaker 4: And so if the status of crypto is not certain,

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Speaker 4: then institutional investors who have been willing to invest.

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Speaker 5: In crypto, you know, if there is uncertainty.

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Speaker 4: They're not going to invest or they're going to invest

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Speaker 4: on less favorable terms. If the uncertainty is taken away,

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Speaker 4: then we may see more funds allocated towards crypto. And

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Speaker 4: I think that's why this is such an important issue

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Speaker 4: for the crypto industry.

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Speaker 5: Coinbase and the.

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Speaker 4: Exchanges are important because without a secondary trading market, it's

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Speaker 4: more difficult to make these digital assets attractive for investors.

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Speaker 4: Because investors like liquidity, right. They like to know that

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Speaker 4: they'll be able to sell the digital assets they.

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Speaker 5: Purchased at a price that's at least.

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Speaker 4: Approximately similar to what they bought the crypto assets for,

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Speaker 4: it's not higher.

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Speaker 5: They want to be able to do.

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Speaker 4: That fairly quickly, and you need exchanges in order for

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Speaker 4: that trading to happen. Without that secondary market trading, I

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Speaker 4: think a lot of investors will be too concern that

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Speaker 4: they're buying something that is completely a liquid and they

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Speaker 4: may not know when they'll be able to get their

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Speaker 4: money back, and so the definition of a security is

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Speaker 4: quite critical in the crypto industry's future. I think that's

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Speaker 4: very clear.

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Speaker 1: So is this a question that the Supreme Court will

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Speaker 1: have to consider eventually?

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Speaker 5: I think it will.

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Speaker 4: It will take some time, but I don't see either

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Speaker 4: side really being able to back down.

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Speaker 5: And I think that the.

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Speaker 4: Crypto industry has raised sufficient.

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Speaker 5: Funds so they've been able to.

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Speaker 4: Hire some of the best lawyers in the country to

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Speaker 4: advocate for them and to make their case. And I

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Speaker 4: think they have a basis for an argument, right. This

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Speaker 4: is an issue that involves application of a fairly vague

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Speaker 4: statuatory definition that's being applied to a fairly new context,

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Speaker 4: one we haven't really seen before, and so they have

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Speaker 4: a colorable legal argument.

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Speaker 5: They have the.

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Speaker 4: Funds to litigate. The SEC also has incentives to litigate

437
00:26:36,920 --> 00:26:40,119
Speaker 4: as well. They've made their position very very clear. They're

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Speaker 4: concerned about the impact on retail investors, and they have

439
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Speaker 4: taken a clear position that some crypto acids are security

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Speaker 4: and so they will litigate as well. I see some

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Speaker 4: of these cases eventually going up to the US Supreme Court.

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Speaker 1: Does it fit in anywhere that Congress is considering, you know,

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Speaker 1: legislation in the crypto market. I mean, does that make

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Speaker 1: it more of a major question if Congress is actually

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Speaker 1: considering it.

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Speaker 4: I guess the question is how seriously are they considering it?

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00:27:11,160 --> 00:27:16,560
Speaker 4: Is there really momentum for Congress to pass comprehensive legislation

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00:27:17,040 --> 00:27:18,439
Speaker 4: on this issue.

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00:27:18,080 --> 00:27:20,280
Speaker 5: I'm very skeptical.

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00:27:19,800 --> 00:27:23,520
Speaker 4: That this gridlocked Congress is going to really ask, and

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00:27:24,040 --> 00:27:25,760
Speaker 4: you know the extent that they do not ask.

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00:27:25,880 --> 00:27:27,720
Speaker 5: There's an argument that the SEC.

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00:27:27,800 --> 00:27:31,240
Speaker 4: Is the regulator that is in the best position to

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00:27:31,359 --> 00:27:36,240
Speaker 4: regulate the exchange point base and crypto assets. So I'm skeptical.

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00:27:36,280 --> 00:27:40,159
Speaker 4: I'm skeptical that there's going to be substantial legislation on

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00:27:40,200 --> 00:27:42,840
Speaker 4: the issue. I just don't see account happening.

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Speaker 5: But I could be wrong, Oh, I don't think so.

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Speaker 1: I can't see this Congress resolving this with legislation, And

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00:27:49,359 --> 00:27:53,080
Speaker 1: in general, how is the SEC doing when faced with these,

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Speaker 1: as you say, very expensive lawyers.

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Speaker 4: I have been impressed by the quality of the SEC

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Speaker 4: work in this area in the litigation. Their work product

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Speaker 4: has been first rate. And you know, these are government

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Speaker 4: lawyers who are you know, not operating in fancy law

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Speaker 4: firms with a lot of resources and they've they've held

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Speaker 4: their own in my view, and we'll see how the

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Speaker 4: litigation plays out over time. It'll be interesting.

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Speaker 1: Thanks so much, Jim, always a pleasure. That's Professor James

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Speaker 1: Park of UCLA Law School. And that's it for this

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Speaker 1: edition of The Bloomberg Law Show. Remember you can always

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00:28:30,000 --> 00:28:32,919
Speaker 1: get the latest legal news on our Bloomberg Law Podcast.

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00:28:33,200 --> 00:28:36,240
Speaker 1: You can find them on Apple Podcasts, Spotify, and at

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00:28:36,400 --> 00:28:41,440
Speaker 1: www dot Bloomberg dot com slash podcast Slash Law, and

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00:28:41,520 --> 00:28:44,560
Speaker 1: remember to tune into The Bloomberg Law Show every weeknight

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00:28:44,680 --> 00:28:48,120
Speaker 1: at ten pm Wall Street Time. I'm June Grosso and

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Speaker 1: you're listening to Bloomberg