Cryptocurrency companies are starting to voice their frustrations with the lack of clarity on rules for the crypto industry. This frustration comes from SEC crackdowns on crypto firms, prompting executives to speak out.
The United States legislature has considered crypto an investment currency for some time. Still, it has yet to move forward in the race to get the crypto industry regulated correctly. In the Emirates, Dubai identifies as a crypto-friendly hub, with regulations supporting various aspects of crypto without any fear.
The crash of FTX in 2022, however, has helped the United States step up the regulatory enforcement in the sector, with the SEC giving a harsh warning in the week that crypto-related companies in the country are not following regulations.
In addition, the SEC warned that people should only invest in assets in the digital realm if they are investing what they can completely afford to lose. Earlier in the week, the SEC leveled charges against the Coinbase CEO, Justin Sun, and some celebrities who endorsed digital coins from the founder.
On the same day, Coinbase did receive some warnings that the SEC had discovered some potential violations by the company in the securities laws. Furthermore, the SEC is in dispute with many other companies in the crypto space, including Gemini, Ripple, and Genesis.
According to an anonymous source speaking to CNBC, the entire crypto ecosystem is now in turmoil, and the SEC feels uncollaborative. The source says there is frustration, especially among players who had been doing everything right the whole time.
The source chose to remain anonymous, given the sensitivity of the whole situation. Nicolas Cary, the president at Blockchain.com, says that the crypto world watches as the SEC continues to wage this war against people fighting and surviving and dubs the whole thing frustrating to watch.
However, Cary believes that the SEC has introduced existing legislation into the crypto world, and the tests are quite primitive. According to Bittrex Global CEO Oliver Lynch, this is not the right path to take, and he thinks it will be unsuccessful in trying and regulating crypto through the lens of traditional finance.
What is Meant by Clarity
When discussing clarity, there are many aspects that the word could mean, and according to CNBC’s interviews at the Paris Blockchain Week, there are many aspects that the SEC is neglecting with regulation.
According to the founder of Algorand, Silvio Micali, there needs to be a clearer definition of security and a commodity, especially in the blockchain space. CEO Lynch also says there is no way of classifying crypto under existing standards since it is a completely new invention that previous lawmakers did not account for.
While some show sympathy towards the SEC’s problem, many suggest that the watchdog is not doing its homework to develop regulations to ensure the industry maintains its principles. According to Lynch, there is nothing more the SEC can do now than enforce the rules they already have.
The SEC’s Take
According to the Chairman of the Securities Exchange Commission, Gary Gensler, the unclear rules argument is unpersuasive. He says that some crypto companies talk about unclear rules instead of admitting their failure to assemble sufficient investor protection mechanisms.
In addition, the Chairman says crypto brokers and other intermediaries need to line up to register because they know about system flaws.