Crypto regulation: this is why the SEC is going too far
The U.S. Securities and Exchange Commission (SEC) and other U.S. authorities have the crypto sector in their crosshairs.
The U.S. Securities and Exchange Commission (SEC) and other U.S. authorities have the crypto sector in their crosshairs. Their actions mainly lead to one conclusion: they are overstepping their powers.
We all know the scene from crime dramas where a detective, facing a threat from a criminal, acts on their own initiative and without their supervisor's approval to prevent worse harm. In the subsequent justification, it’s said there was a threat—they had to move. Today, the SEC and the Commodity Futures Trading Commission (CFTC) seem to be using the same playbook.
Oversight doesn’t make the laws
Just like in Europe, American regulators aren’t responsible for making laws. As is typical in most democracies, laws are passed by lawmakers in legislatures or Congress. It’s the authorities’ job to enforce those laws and intervene when violations occur or recur.
Based on this premise, it’s now clear that the SEC and other U.S. authorities are overreaching in the "crypto crackdown." In their heavy-handed approach to the crypto industry, authorities are, as we’ve noted, creating facts or crypto regulation that should really come from Congress in the U.S. Jake Chervinsky, Chief Policy Officer of the Blockchain Association, arrives at this assessment in his View post on X.
SEC vs. crypto: "Everything is a security".
By repeatedly classifying all cryptocurrencies as securities and treating applications like staking as securities transactions, the SEC is making life easy for itself. In doing so, the SEC is taking on responsibilities that aren’t yet assigned to it and creating rules before laws are passed.
That’s why it’s hoped that other state members will apply the brakes in time. The current situation has crypto firms in a state of shock because they could face a sanction from authorities at any moment. A recent example was the Kraken crypto exchange, which had to pay $30 million to the SEC and shut down its staking service. Coinbase CEO Brian Armstrong already feels warned and says he’ll fight in court for his staking service if the SEC comes knocking.
The crypto sector isn’t the Wild West, Gary Gensler!
SEC chief Gary Gensler isn’t John Wayne, running around shooting from the hip—we don’t live in the Wild West. With its rapid advances, the SEC is not only hurting crypto firms but also scaring off the banks and companies that work with the crypto industry, think Silvergate and Signature Bank.
Beyond the companies, consumers are the ones paying the price as they’re forced to switch to overseas and, if in doubt, less regulated providers. Banning isn’t protecting consumers or building an innovative sector—hopefully Mr. Gensler realizes this in time.
