SEC Criticized for How It Regulates Crypto — Chair Gensler Says Most Crypto Tokens ‘Have Attributes of Securities’ – Regulation Bitcoin News

For its regulation of the cryptocurrency sector, U.S. Securities and Exchange Commission has come under fire. The criticism followed the securities regulator’s action against a former Coinbase employee in an insider trading case, in which the SEC named nine crypto tokens listed on Coinbase as securities.

SEC Slammed For Regulation by Enforcement

After a Coinbase former employee was charged in an insider trading case, the U.S. Securities and Exchange Commission has come under fire for its enforcement approach towards regulating crypto. According to the SEC’s complaint, nine of the crypto tokens on Coinbase were considered securities. However, this was quickly disputed by the Nasdaq listed crypto exchange.

Caroline D. Pham, Commodity Futures Trading Commission Commissioner (CFTC), released a statement Thursday. She said:

The case SEC v. Wahi is a striking example of ‘regulation by enforcement.’

“The SEC complaint alleges that dozens of digital assets, including those that could be described as utility tokens and/or certain tokens relating to decentralized autonomous organizations (DAOs), are securities,” she said.

Brian Quintenz, a former Commissioner of the CFTC, agreed with Pham in tweeting:

Regulating enforcement by threats, leverage and PR is totally inappropriate. Always.

Administrative Procedure Act (APA), applies to federal agencies
government. This document outlines the procedures that can be used to create different types of rules.

Quintenz said in August last year that “the SEC has no authority over pure commodities or their trading venues, whether those commodities are wheat, gold, oil …. or crypto assets.”

U.S. U.S. He tweeted Friday: “Yesterday’s enforcement action is the perfect example of the SEC having a clear opinion on how and why certain tokens classify as securities. Yet the SEC failed to disclose their view before launching an enforcement action.”

CNBC interviewed Gary Gensler, Chairman of the SEC about cryptocurrency regulation. “I’m neutral about the technology but I’m not about the investor protection. These are a highly speculative asset class,” he emphasized, elaborating:

Many tokens are available, with many of them having attributes that can be used to create securities.

Gensler warned: “Just like any field of venture capital and new projects, many projects fail. You look at the statistics, in fact, most new ventures fail, and it’s important that the public get the disclosure, understand the risk. There’s very significant risk in this field.”

U.S. Congressman Tom Emmer also slammed the SEC for “cracking down on companies outside its jurisdiction.” He asserted: “Under Chair Gensler, the SEC has become a power-hungry regulator, politicizing enforcement, baiting companies to ‘come in and talk’ to the Commission, then hitting them with enforcement actions, discouraging good-faith cooperation.”

How do you feel about the regulation of the crypto industry by the SEC? Comment below to let us know your thoughts.

Kevin Helms

Kevin, a student of Austrian Economics and evangelist since 2011, discovered Bitcoin. He is interested in Bitcoin security and open-source software, network effects, and the intersection of cryptography and economics.