The SEC trusts that existing financial policy is sufficient enough to regulate the crypto industry.
The SEC has made it clear that it’s in no rush to regulate the multi-billion dollar crypto industry operating within its borders. In April, Coinbase filed a mandamus petition requesting federal courts to instruct the SEC to issue clear guidelines for crypto companies operating within the US.
The petition came after the SEC issued a Wells notice to Coinbase indicating their intention to take enforcement action against them.
The SEC responded to Coinbase’s petition today informing the exchange that the Commission is under no obligation to issue new regulations relating to crypto and that existing policy suffices. The document stated, “the Commission has limited resources, which it has appropriately directed to its robust regulatory and enforcement agenda, among other priorities.”
Coinbase chief legal officer Paul Grewal tweeted a seven-part thread this morning lamenting the Commission’s less-than-helpful response.
Grewal said the SEC has acknowledged that it will continue to use enforcement action instead of proper rulemaking, adding, “but not to worry — those enforcement actions may eventually “inform” not-yet-planned rulemaking.”
One of the more surprising aspects of the SEC’s response was a paragraph stating that Gary Gensler’s views (or the views of any single Commissioner) do not reflect the views of the Commission.
The document stated: “And remarks from one member of the Commission (including the Chair) represent only the views of that member”, citing Gensler’s remarks at the Penn Law Capital Markets Association Annual Conference back in April 2022.
Gensler holds the view that most cryptocurrencies are securities and exchanges should comply accordingly.
He reconfirmed this belief yesterday at the Financial Markets Conference, stating, “if the public is investing money and anticipating profit based upon the efforts of others, in a common enterprise, that’s a security.”
Gensler also clarified yesterday that the SEC doesn’t publish crypto-specific rules because such rules have “already been published”. He said: “To make it quite direct: this is a field that has been operating largely non-compliant. […] There’s nothing about a new technology that makes it non-consistent with the public policies that congress has laid out.”
The SEC’s refusal to regulate the crypto industry has placed the US far behind Europe and other economic areas in terms of regulation.
In April, the EU approved the world’s first comprehensive legislation protecting consumers and guiding companies on compliance. The UK has also laid out plans to establish robust regulation, and the UAE has opened the first digital asset free-zone.
US-based crypto CEOs praised the EU framework, with Gemini CEO Tyler Winklevoss tweeting: “While US regulators have been busy infighting and refusing to provide the most basic of clarity for the crypto industry, the European Union just approved the MiCA regulation, which provides a comprehensive regulatory framework for crypto in Europe. It’s sad to see the US being left behind on such an important technology and its promise.”
Disclaimer: CryptoPlug does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
