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The cryptocurrency community has extensively criticized the US Securities and Exchange Commission (SEC) and, more specifically, its Chair Gary Gensler. Gensler’s actions faced dissent even from members of his own agency.
Gensler encountered political pushback for his regulatory approach, yet the SEC Chair continued to defend the crackdown on digital asset markets, stating that he had never seen an industry so routinely violate securities laws.
SEC’s Approach to Regulation by Enforcement
As Coinbase prepares for a legal battle with the SEC, its CEO Brian Armstrong offered strong criticism of the regulatory agency. Armstrong believes the SEC has caused “untold harm” to the country by choosing to regulate the digital asset space through enforcement actions rather than through proactive collaboration between regulators and industry leaders.
In a recent tweet, Armstrong wrote:
“Spent the day in DC meeting with members of Congress. We need regulatory clarity in the U.S. for the centralized players in crypto for many reasons – consumer protection, national security, economic growth, etc. The SEC has caused untold harm to America with its policy of regulation by enforcement. We will fight to fix that.”
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The head of the largest US crypto exchange also raised the possibility of relocating the company outside the United States if the regulatory climate does not improve, following the SEC’s warning of potential securities law violations.
Coinbase is not the only industry representative to criticize the financial regulator and its policies.
Web3 venture capital firm Paradigm recently stated that the SEC’s attempt to “brute force crypto assets that may not even constitute ‘securities’ into an ill-fitting disclosure framework is bad policy.” The firm also claimed that the agency failed to provide crypto entrepreneurs with a viable path to compliance.
Meanwhile, US Representative Warren Davidson announced his intention to introduce legislation to remove Gensler from his position, aiming to “correct a long series of abuses.”
SEC’s Crypto War
The SEC’s stance on cryptocurrency, under Chair Gensler, was heavily condemned by Republican members of Congress during Tuesday’s Congressional hearing. In his opening remarks, House Committee on Financial Services Chairman Patrick McHenry (R-NC) described the SEC’s approach to crypto exchanges as “nonsensical” and criticized the lack of clarity.
Despite mounting criticism, the agency remains steadfast in its crackdown on the crypto sector. SEC Chair Gary Gensler defended the actions against cryptocurrency markets while reiterating his belief that the agency possesses sufficient authority to regulate the industry. He maintained that regulatory clarity exists, adding that he had never seen an industry so routinely break securities laws.
