If a business’s application is rejected by the SEC, it cannot offer securities-related services in the US, at least in the form described in its application. Because of confusion over the classification of crypto assets, this eventuality could pose an “existential threat,” says Siemer. “To go in and register means to cease to exist,” he says. “There is no framework; there is no path.”

The question of what crypto is could be resolved in the courts. An ongoing case between the SEC and cross-border payments company Ripple over…