SEC Criticized for How It Regulates Crypto — Chair Gensler Says Most Crypto Tokens ‘Have Attributes of Securities’

SEC Criticized for How It Regulates Crypto — Chair Gensler Says Most Crypto Tokens "Have Attributes of Securities"

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. SEC Slammed for Regulation by Enforcement

The U.S. Securities and Exchange Commission (SEC) has been heavily criticized for taking an enforcement approach to regulating the crypto sector after the regulator charged a former Coinbase employee in an insider trading case. In its complaint, the SEC stated that nine crypto tokens listed on Coinbase are securities, a finding immediately disputed by the Nasdaq-listed crypto exchange.

Commodity Futures Trading Commission (CFTC) Commissioner Caroline D. Pham released a statement about the case Thursday. She wrote: 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.

Quintenz said in August last year that “the SEC has no authority over pure commodities or their trading venues, whether those commodities are wheat, gold, oil …. or crypto assets.”

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.”

Last week, U.S. Congressman Tom Emmer also slammed the SEC for “cracking down on companies outside its jurisdiction.” He asserted: “Under Chair Gensler, the SEC has become a power-hungry regulator, politicizing enforcement, baiting companies to ‘come in and talk’ to the Commission, then hitting them with enforcement actions, discouraging good-faith cooperation.” Tags in this story Brian Quintenz, Caroline Pham, CFTC, Coinbase, Crypto regulation, Gary Gensler, insider trading, pat toomey, regulation by enforcement, SEC, sec v wahi, Securities, Security Tokens, tom emmer, us congressman, us senator

What do you think about how the SEC is regulating the crypto sector? Let us know in the comments section below. Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography. Credit Cards Should Not Be Used for Crypto Transactions, Taiwan’s Financial Watchdog Says REGULATION | 3 hours ago Argentinian Government Excludes Crypto Investors From Buying Dollars REGULATION | 6 hours ago

Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleStats Show Over 53,000 Wrapped Bitcoins Were Removed From Circulation in the Last 3 Months Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItOman to Incorporate Real Estate Tokenization in Virtual Assets Regulatory Framework

Real estate tokenization is set to be incorporated into Oman Capital Markets Authority (OCMA)"s virtual asset regulatory framework. According to an advisor with the authority, the tokenizing of real estate will open investment opportunities for local and foreign investors. Real ... read more.UAE Airliner Emirates to Launch NFTs and Experiences in the Metaverse Interest in Real Estate Investments in Spain Grew 400%, With Some Using Crypto and Stocks as Payment Method Digital Ruble ‘Much Needed,’ Russia’s Central Bank Says, Won’t Delay Testing Iran to Increase Penalties for Unauthorized Cryptocurrency Mining