The SEC, Digital Assets and Game Theory

The Journal of Corporation Law (2021 Forthcoming)

Rutgers Law School Research Paper No. Forthcoming

59 Pages Posted: 18 Mar 2021 Last revised: 13 May 2021

See all articles by Yuliya Guseva

Yuliya Guseva

Rutgers, The State University of New Jersey - Rutgers Law School

Date Written: March 8, 2021


The Securities and Exchange Commission (SEC) has not provided a clear rule to digital-asset market participants concerning the nature of cryptoassets, namely, how to determine whether an asset is a security subject to the federal securities laws or something else, like a commodity
regulated outside of the purview of the securities statutes. Instead of a formal rule, the SEC has chosen a more flexible modus operandi of enforcement actions in reliance on the functional definition embedded in the Supreme Court Howey decision interpreting the term “investment
This Article examines empirical data and develops a model suggesting that, despite the underlying indeterminacy associated with functional definitions and regulation by enforcement, the SEC attempted to reduce information losses and improved regulatory clarity by following a set of well-defined strategies during the first years of its crypto-enforcement efforts. Unfortunately, recent enforcement actions may upend these initially successful game strategies and undermine the efficacy of the techniques the SEC used to minimize the downsides of functional definitions and the regulation via enforcement tactics. As a result, the fabric of cooperation between the innovators and the SEC may be broken, leading to a suboptimal outcome for all market participants and the Commission itself. These problems are particularly important in the rapidly evolving world of crypto, DeFi, and fintech.

Keywords: digital assets, cryptoassets, blockchain, distributed ledger technology, securities regulation, securities enforcement, SEC, regulation by enforcement, regulatory clarity, game theory

Suggested Citation

Guseva, Yuliya, The SEC, Digital Assets and Game Theory (March 8, 2021). The Journal of Corporation Law (2021 Forthcoming), Rutgers Law School Research Paper No. Forthcoming, Available at SSRN:

Yuliya Guseva (Contact Author)

Rutgers, The State University of New Jersey - Rutgers Law School ( email )

Newark, NJ
United States

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