SEC criticized by crypto executives for lack of clarity
SEC – After the current events in the crypto field, some executives from crypto businesses have expressed their dissatisfaction with the US government.
Several have chastised them for a lack of understanding of the industry’s regulations.
Yet, the Securities and Exchange Commission is a key target of the crypto community’s fury owing to its aggressive efforts against crypto businesses.
US & crypto
While other countries are becoming receptive of Bitcoin, the United States is lagging behind.
The government has yet to adopt a complete set of legislation that would allow cryptocurrency and blockchain enterprises to operate without fear of being targeted by officials.
With the collapse of cryptocurrency exchange FTX in 2022, the US Securities and Exchange Commission (SEC) has taken the initiative to increase legal measures against firms.
The clash
The SEC issued a Wells notice to Coinbase, one of the leading cryptocurrency exchanges, on Wednesday.
It issued a warning to the corporation after discovering probable breaches of US securities law.
In addition, the SEC charged crypto entrepreneur Justin Sun with fraud and unregistered securities against celebrities who promoted digital currency he was advocating.
The SEC is now involved in a legal battle with numerous other cryptocurrency startups, including Gemini, Genesis, and Ripple.
Reception
“It feels uncollaborative,” said an anonymous crypto executive over the Paris Blockchain Week event.
“It’s very frustrating for players that have been doing right the whole time.”
Meanwhile, ConsenSys CEO and Ethereum co-founder Joe Lubin voiced alarm about the ecosystem.
“I think we’re sort of continuing to watch the SEC play this game of punishing the people that are still surviving,” said Blockchain.com president Nicolas Cary.
“And it’s a little bit, you know, sort of frustrating thing to observe.”
The majority of the SEC’s activities include applying contemporary restrictions to the crypto business decades after the Howey Test.
The Howey Test is an important test for determining whether or not something is secure.
Yet, many in the cryptocurrency business believe that is not the best approach to go.
“Where I think you have less successful regulatory regimes is when you try to analyze crypto through the lens of traditional finance,” said Oliver Linch, the CEO of Bittrex Global.
“You say, ‘Well, is it a bit like a security? Is it a commodity?’ No, it’s kind of none of those things. It’s crypto.”
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Clarity & sympathy
The Paris Blockchain Week is one of Europe’s most famous crypto events, and the SEC’s actions were one of the most hotly debated subjects among guests.
Some executives asked US regulators for clarification.
“We’d love to have a little more clarity in regulation,” said Silvio Micali, the founder of blockchain company Algorand.
Some, on the other hand, were more sympathetic to SEC.
They said that the watchdog is following the regulations as they are, and that the US government has the authority to amend them.
“What are they supposed to do? If all you’re given is a hammer, the whole world looks like a nail,” said Linch.
However, Cary stated that the SEC is simply doing its job in order to safeguard customers.
The SEC
In an editorial article published on The Hill this month, SEC Chair Gary Gensler addressed the issues, claiming that the agency was clear on the laws.
“I find the talking point that there’s a lack of clarity in the securities laws unpersuasive,” he said.
“Some crypto companies might message that the laws are unclearer rather than admitting that their platforms don’t have sufficient investor protection.”
Gensler also identified examples of crypto enterprises that are subject to traditional securities rules, such as when they provide loan products.
Furthermore, he stated that crypto middlemen are not lined up to register with the SEC and comply with Congress’ legislation.
Additionally, the SEC chair stated that enforcement proceedings are another tool in the regulator’s arsenal for weeding out noncompliance.
Falling behind
CEOs cautioned that the United States’ lack of effective regulation might cause the country to slip behind other countries and jurisdictions.
“It’s incumbent, I think, on Congress to actually create a legal regulatory framework that regulates crypto properly, because… crypto is here to stay,” said Linch.
Governments throughout the world are debating how to regulate bitcoin.
Dubai and Switzerland have both recognized themselves as crypto-friendly jurisdictions with favorable regulations.
Meanwhile, the European Union plans to implement the Markets in Crypto-Assets Regulation, or MiCA, in 2023.
It is intended to impose regulations on and around digital currency enterprises.
Ripple’s president, Monica Long, fears the United States may slip behind other jurisdictions in the crypto economy.
“Europe is really emerging as a leader in terms of setting really clear regulations and rules that allow crypto companies and also traditional finance to embrace crypto,” said Long.
Image source: The American Prospect
