quote: @leereiners - Not sure if your post counts as a subtweet, exactly, but I wouldn’t have minded your tagging me. As you know, I’m a firm believer in a robust debate on these important issues, and I have always valued your perspective, even when we disagree – sometime strongly. The fact here is that your premise is foundationally mistaken. It is Judge Rakoff’s decision that was the outlier and, regardless, referring to a handful of federal cases, almost all of which were decided at a motion to dismiss - the most preliminary stage – as “most of crypto’s history” is uncharacteristically misleading on your part. The fact is that the federal case law that exists on this topic remains unsettled, but it had unquestionably been trending away from the position you advocate (for example, you failed to mention Judge Orrick’s key decision in Payward, which affirmatively admonishes the SEC for referring to tokens as “crypto asset securities”). As I wrote about extensively in Ineluctable Modality (which reviewed and indexed every single federal appellate Howey case), courts have consistently taken a flexible view when a purported sale of a product or service appears in economic reality to be more appropriately considered a fundraising scheme subject to the federal securities laws. That’s right on policy and right on law. However, the position you advocate for in your article is not that, nor is it what is contained in the Clarity Act July text. Howey-type fundraising would remain subject to the federal securities laws and places measured obligations on the fundraising party. (It is fair to ask whether those obligations are too measured, but “Reg Crypto” and most of the features you describe were the subject of a multi-year policy discussion and relatively little has changed in that regard since the January 2026 text.) The consistent problem you face, and the fundamental flaw of the position you advocate for, is that most tokens are simply not themselves securities in any cognizable way. That is, unlike any other type of financial instrument recognized as a security, if you examined a given token on its face, assuming it did not provide “disqualifying financial rights”, you would not be able to identify it as a “security”. Critically most tokens lack the fundamental element of a security - a security’s “ineluctable modality“ if you will - an issuer who, if dissolved and no longer in existence, would mean that the security also no longer exists. That is the case for every other security that has ever existed. Why is that so essential? Because a security is not the paper, or token, or other means of conveyance, of rights. The security is the inchoate rights themselves, the *legal relationship* that directly binds a holder to an identifiable issuer. Those rights do not need to be embodied in a formal contract (and as many reading this know, I have disagreed with those suggesting that). An investment scheme subject to the federal securities laws can be created with the wink of an eye, the nudge of an elbow, or any set of actions that reasonably create the four Howey elements. You and I have discussed this and you know that I agree that many fundraising schemes involving tokens fall neatly within the parameters of our federal security laws. The problem arises when two third parties deal in something (like a token) that is not itself a security, but has “security-ness” artificially imputed on it in order to achieve a separate policy objective. The persons or entities exchanging that asset have no way of determining with certainty whether or not they are engaged in regulated transaction. This violates fundamental due process and is also essentially unworkable. (Continues in comments) | Title I of the CLARITY Act would codify crypto’s “separation theory”: a token is not a security, even when it is sold as part of an investment contract. That is an invitation to regulatory arbitrage. My new post explains why: https://t.co/brtSYN2aNM

quote: @leereiners - Not sure if your post counts as a subtweet, exactly, but I wouldn’t have minded your tagging me. As you know, I’m a firm believer in a robust debate on these important issues, and I have always valued your perspective, even when we disagree – sometime strongly. The fact here is that your premise is foundationally mistaken. It is Judge Rakoff’s decision that was the outlier and, regardless, referring to a handful of federal cases, almost all of which were decided at a motion to dismiss - the most preliminary stage – as “most of crypto’s history” is uncharacteristically misleading on your part. The fact is that the federal case law that exists on this topic remains unsettled, but it had unquestionably been trending away from the position you advocate (for example, you failed to mention Judge Orrick’s key decision in Payward, which affirmatively admonishes the SEC for referring to tokens as “crypto asset securities”). As I wrote about extensively in Ineluctable Modality (which reviewed and indexed every single federal appellate Howey case), courts have consistently taken a flexible view when a purported sale of a product or service appears in economic reality to be more appropriately considered a fundraising scheme subject to the federal securities laws. That’s right on policy and right on law. However, the position you advocate for in your article is not that, nor is it what is contained in the Clarity Act July text. Howey-type fundraising would remain subject to the federal securities laws and places measured obligations on the fundraising party. (It is fair to ask whether those obligations are too measured, but “Reg Crypto” and most of the features you describe were the subject of a multi-year policy discussion and relatively little has changed in that regard since the January 2026 text.) The consistent problem you face, and the fundamental flaw of the position you advocate for, is that most tokens are simply not themselves securities in any cognizable way. That is, unlike any other type of financial instrument recognized as a security, if you examined a given token on its face, assuming it did not provide “disqualifying financial rights”, you would not be able to identify it as a “security”. Critically most tokens lack the fundamental element of a security - a security’s “ineluctable modality“ if you will - an issuer who, if dissolved and no longer in existence, would mean that the security also no longer exists. That is the case for every other security that has ever existed. Why is that so essential? Because a security is not the paper, or token, or other means of conveyance, of rights. The security is the inchoate rights themselves, the *legal relationship* that directly binds a holder to an identifiable issuer. Those rights do not need to be embodied in a formal contract (and as many reading this know, I have disagreed with those suggesting that). An investment scheme subject to the federal securities laws can be created with the wink of an eye, the nudge of an elbow, or any set of actions that reasonably create the four Howey elements. You and I have discussed this and you know that I agree that many fundraising schemes involving tokens fall neatly within the parameters of our federal security laws. The problem arises when two third parties deal in something (like a token) that is not itself a security, but has “security-ness” artificially imputed on it in order to achieve a separate policy objective. The persons or entities exchanging that asset have no way of determining with certainty whether or not they are engaged in regulated transaction. This violates fundamental due process and is also essentially unworkable. (Continues in comments) | Title I of the CLARITY Act would codify crypto’s “separation theory”: a token is not a security, even when it is sold as part of an investment contract. That is an invitation to regulatory arbitrage. My new post explains why: https://t.co/brtSYN2aNM

Source:https://x.com/SenLummis/status/2083944078899655003