The US SEC is currently prosecuting three people for insider trading in the digital asset industry, leaving the Blockchain Association to once again denounce the SEC’s confusing and harmful approach. As the cryptocurrency industry faces significant regulatory challenges, Blockchain Association Policy Director Jake Chervinsky believes that the United States Congress is in the best position to establish the laws that will govern it.
The SEC’s Confusing and Harmful Approach to Cryptos
After a disastrous year for cryptocurrencies due to the FTX affair, skeptics were quick to rush for new regulations. In the eyes of some, the SEC’s response lacks both clear direction and pragmatic thinking.
Jake Chervinsky argues that Congress is in a better position to regulate the cryptocurrency industry than regulators like the SEC. He argues that Congress can pass laws more in line with the needs and interests of all.
SEC targets non-recourse third parties
In fact, the SEC often uses “enforcement strategy” regulation to regulate the digital asset industry.
Kraken halted its staking service and settled the SEC charges by paying a $30 million fine. Similarly, Paxos stopped minting the Binance USD (BUSD) stablecoin.
However, this strategy by regulators has drawn strong criticism. Indeed, some players believe that the SEC has extended its own authority beyond what the law allows.
They affirm that the SEC targets third parties, and sows fear and mistrust among market participants. Blockchain Association CEO Kristin Smith declared about the SEC:
“Regulation by the SEC’s enforcement strategy is nothing new. However, the SEC’s action in this case is directed against third parties who have no real means of defending themselves. This case is the latest effort by the SEC to unduly extend its authority by attracting third parties who cannot challenge or defend its claims.
In sum, the SEC has taken aggressive regulatory action against the digital asset industry. Critics argue that the SEC should work with Congress. This would establish a clear and predictable regulatory framework. Thus, regulators will stop relying on an ambiguous enforcement strategy that leaves market participants in limbo.
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