The U.S. Securities and Exchange Commission (SEC) has been heavily criticized for its approach to regulating the crypto sector. 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.
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.
Former CFTC Commissioner Brian Quintenz concurred with Pham, tweeting:
Regulation by enforcement, threats, leverage, PR, or any other means beyond the APA rulemaking process is wholly inappropriate. Always.
The Administrative Procedure Act (APA) applies to all agencies of the federal
government. It provides the general procedures for various types of rulemaking.
U.S. Senator Pat Toomey (R-PA) also shared his opinion on the SEC v. Wahi case. 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.”
SEC Chairman Gary Gensler shared his opinion on cryptocurrency regulation in an interview with CNBC Thursday. “I’m neutral about the technology but I’m not about the investor protection. These are a highly speculative asset class,” he emphasized, elaborating:
There are thousands of tokens, most of which have attributes of 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.”
What do you think about how the SEC is regulating the crypto sector? Let us know in the comments section below.