Novelist Joseph Heller coined the now-common term in his novel of the same name. In Heller’s screwball antiwar tragedy, “Catch 22” was a circular bureaucratic rule, designed by the U.S. government to prevent draftees from leaving the World War II-era military. According to the (fictional) rule, you could only get out of the Army if you could prove you were crazy – but if you wanted to get out of the Army, you were clearly all too sane.
Gary Gensler’s SEC seems to have relied on similar logic when imagining its preferred crypto market structure: You’re free to launch a regulated crypto exchange, as long as it doesn’t actually enable the purchase or sale of crypto.
This point was driven home by the (audibly frustrated) Representative Mike Flood (R-NE), who asked Kaplan a pair of simple questions: Does Prometheum allow users to buy and sell ether (ETH)? What about bitcoin (BTC)?
Kaplan’s answer to each question was a curt, faintly embarrassed no.
Source: Gary Gensler’s Catch-22 Vision of ‘Regulated’ Crypto Brokers
