As markets have embarked into the new frontier of cryptocurrency in recent years, the top federal agency that oversees financial services is admitting its crypto approach has been wrong.
“I think our policies and our approach over the last several years have been just really a disaster for the whole industry,” the commissioner of the U.S. Securities and Exchange Commission (SEC) Mark Uyeda said on “Mornings with Maria” Wednesday.
“We have been sending this ‘policy through enforcement,’ we’ve done nothing to provide guidance on it,” he continued. “And as a result, this has been achieved by the courts. And different courts have ruled different ways.”
On Tuesday, Crypto.com filed a lawsuit against the SEC alleging that they’ve overstepped their jurisdiction by regulating the cryptocurrency industry.
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Reuters has reported that the crypto trading platform is following the receipt of a “Wells notice,” which is a formal declaration that regulator staff intend to recommend an enforcement action on the grounds that crypto tokens qualify as securities.
“Our lawsuit contends that the SEC has unilaterally expanded its jurisdiction beyond statutory limits and separately that the SEC has established an unlawful rule that trades in nearly all crypto assets are securities transactions,” Crypto.com told the outlet.
“While I won’t comment on the specifics of this litigation,” Uyeda responded, “what has gone on is part of a broader frustration with the fact that we have not provided interpretive guidance as to what you can and cannot do and if you are involved in some sort of securities offering, how you register, how you get regulated as a broker-dealer, how you get registered as an exchange.”
Crypto.com’s lawsuit comes just four months after competitor platform Coinbase launched a legal offensive against the SEC and the Federal Deposit Insurance Corporation (FDIC) to procure documents relating to the agencies’ approaches to crypto regulation.
Coinbase’s legal action aimed to shed light on what it describes as a “deliberate and concerted effort by the SEC, FDIC and other financial regulators” to pressure banks to deny crypto firms access to the federal banking system.
Uyeda claimed Wednesday that the pro-crypto companies are arguing for “non-material things that are not going to change the bottom line.”
“Things that won’t affect how someone values the enterprise,” the commissioner expanded. “And instead it seems more dressed up: Hey, we can obtain some social change because we can’t get it through the Congress and legislation, why don’t we do it through the so-called independent financial regulators?”
When it comes to what the SEC should do differently, Uyeda addressed the “need to lay out some clear guidance and interpretations on what exactly falls within and falls outside of the securities laws.”
“You can’t even start to have a discussion unless you know what’s in and what’s out. And then from there, to the extent they are within our realm, we need to think about, alright, how does the broker handle these securities?”
Top House Republicans sent a letter to SEC Chairman Gary Gensler just last month, raising concerns that the proclaimed cop on the crypto beat is engaging in a regulatory power grab by classifying certain “airdrops” as unregistered securities.
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FOX Business’ Eleanor Terrett contributed to this report.
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