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(Kitco News) –
Mark Cuban, the billionaire tech investor and cohost of Shark Tank, has joined the chorus of market participants and industry experts criticizing the U.S. Securities and Exchange Commission (SEC) for refusing to provide crypto firms with a clear process for registration.

“This is an SEC WEB PAGE about the howey test and tokens that often conflicts with what SEC Enforcement has said publicly,” Cuban wrote in a tweet on Sunday. “It’s worth a read to get more clarity on what may or may not be a security.”

Cuban shared a link to a 13-page SEC document entitled Framework for ‘Investment Contract’ Analysis of Digital Assets, which purports to offer guidance on how to determine whether or not a digital asset would qualify as a security in the eyes of the Commission.

“In this guidance, we provide a framework for analyzing whether a digital asset is an investment contract and whether offers and sales of a digital asset are securities transactions,” the document reads, before going through the three key prongs of the Howey test as they relate to crypto.

“The first prong of the Howey test is typically satisfied in an offer and sale of a digital asset because the digital asset is purchased or otherwise acquired in exchange for value, whether in the form of real (or fiat) currency, another digital asset, or other type of consideration,” they write. “Courts generally have analyzed a ‘common enterprise’ as a distinct element of an investment contract,” they say about the second criteria. “In evaluating digital assets, we have found that a ‘common enterprise’ typically exists.”

The rest of the document is devoted to analyzing the various factors for determining whether or not the third element of the Howey test, “Reasonable Expectation of Profits Derived from Efforts of Others,” applies to a particular digital asset.

Cuban said the document, and the analysis it contains, are of limited value for U.S. crypto firms who want to become regulated. “Unfortunately none of the elements presented in this page are part of the registration process,” he wrote. “Which makes it near impossible to know, with or without an army of securities lawyers, what is or is not a security in the crypto universe.”

Cuban also linked to another tweet he posted on June 9 contrasting the SEC’s careful and constructive flagging of stock loans as an area in need of clarification with the regulation-by-enforcement approach the Commission has taken to digital assets.

“Here is the SEC calling the stock loan industry ‘opague’ [sic] and requiring transparency,” he wrote. “Note, they are not calling ‘stock loans’ a security as they are trying to do with the loaning of crypto assets. Nor are they suing the Stock Loan Departments of brokers/banks. They are going through a comments process.”

Cuban said the SEC should adopt the same approach in their dealings with crypto firms and token offerings. “I think their difference in approach is emblematic of their intent for one industry vs another,” he wrote.

He also tagged Brian Armstrong, the Coinbase CEO whose exchange was charged by the SEC on June 6 – and who has insisted that they have made every effort to register – and Republican Senator Cynthia Lummis, who issued a scathing attack on the regulator following the action against Coinbase.

“The SEC has failed to provide a path for digital asset exchanges to register, and even worse has failed to provide adequate legal guidance on what differentiates a security from a commodity,” Lummis tweeted at the time. “The SEC’s continued reliance on regulation by enforcement continues to harm consumers. Real consumer protection requires creating a robust legal framework that exchanges can comply with, not pushing the industry offshore or into the shadows.”

Cuban has been a staunch supporter of Bitcoin and the crypto community in recent years. In a December appearance on comedian Bill Maher’s ‘Club Random’ podcast, he stuck up for Bitcoin, which had lost much of its value since the market peak in late 2021, while denigrating gold as an investment.

“I want Bitcoin to go down a lot further so I can buy some more,” he said on the podcast. “If you have gold, you’re dumb as f**k.”

Cuban said that although gold is a store of value, it is neither a safe nor a protected asset.

“Gold is a store of value, and so is Bitcoin,” he said. “If everything went to hell in a handbasket and you had a gold bar, you know what would happen? Someone would beat the f**k out of you or kill you and take your gold bar. It’s useless.”

Cuban added that bitcoin is also protected on a digital ledger, and noted that gold itself is basically a digital asset, as few investors own the physical metal.

Cuban has himself been caught up in the legal and regulatory actions targeting the U.S. crypto industry. On August 10, 2022, Cuban was named in a class-action lawsuit alongside the bankrupt crypto brokerage Voyager Digital which alleges that he helped operate what amounts to a Ponzi scheme.

The lawsuit claimed that Cuban played a crucial role in promoting the Voyager platform and misrepresented the firm on numerous occasions, at one point saying the platform was “as close to risk-free as you are going to get in the crypto universe.” Voyage filed for bankruptcy protection in July 2022.