David Schwartz Comments Reignite Debate Over Securities Definition in Crypto Space

Coinbase’s Chief Legal Officer, Paul Grewal, sparked the debate when he asserted that “baseball cards would be securities under the arguments made by the current leadership of the SEC.” This statement led to a flurry of opinions on social media, with one participant recalling a 2017 comment by an SEC staffer who questioned why baseball cards were not considered securities.

Ripple CTO Questions Baseball Cards and Art as Securities

David Schwartz challenged traditional notions, arguing that the value of baseball cards, like other collectibles, is tied to the efforts of promoters and scarcity maintenance. He questioned whether the value of existing cards would drop if a million more were printed, emphasizing the role of promoters in determining scarcity and collectible status.

He also extended his critique to art, challenging the idea that paintings and early works are not subject to speculative investment and contended that buying art early in an artist’s career is a form of speculation on the potential increase in value through future works and promotions.

Schwartz’s comments are important because Ripple and XRP have been under scrutiny from the SEC for over three years. However, unlike some in the crypto community who have taken a categorical side against the regulator, Schwartz has objectively noted reasons why things like baseball cards and art can be regulated as securities.

As the debate continues, it remains to be seen how regulators will ultimately classify these assets. However, Schwartz’s insights provide a fresh perspective on a complex issue that is likely to continue shaping the future of cryptocurrency and related industries.