The United States Securities and Exchange Commission (SEC) has been infamously unfriendly to the crypto space, as many see it as being overbearing. However, its officials believe that this hasn’t been the case so far.
In a hearing before the Senate Committee on Banking, Housing, and Urban Affairs on December 10, SEC chairman Jay Clayton maintained that the SEC has been able to hold a “measure, yet positive” approach to the cryptocurrency space, while adding that their stance has helped innovators to operate without fear while protecting investors.
Clayton also elaborated on the potential of blockchain and its related concepts to help innovators amass massive amounts of wealth. To achieve this, the industry needs a regulatory framework to guide it to ensure the overzealousness of businesses doesn’t lead to losses for investors.
While it’s noble for the SEC honcho to say most of these things, their actions have been anything but positive. This year alone, the stance of the SEC on the cryptocurrency industry has been criticized by several people in the crypto and traditional finance spaces.
For one, many have accused the regulator of being overly ambitious in its campaign to regulate assets, as the agency has so far picked fights with almost every company that issues a token. This year alone, the SEC has had run-ins with social media giant Facebook, mobile messaging platform Telegram, and social media company Kik over their ability to launch tokens- Libra, GRAM, and KIN respectively.
On all three occasions, the SEC maintained the same thing; that the assets which these companies are hoping to launch are securities, and thus, should be put under its control. The financial watchdog already charged Telegram and Kik for violating the Securities Act of 1933 by issuing tokens without seeing its permission, while it is working with lawmakers to bring Facebook’s Libra under its auspices as well.
Sluggish Approval on Investment Products
Then, there is the stance of the agency on cryptocurrency products. While some progress has been made on the ability of investors (particularly, institutions) to trade and invest in cryptocurrencies, the SEC has gotten a lot of flack for consistently rejecting approvals from companies looking to launch Bitcoin exchange-traded funds (ETFs).
This year alone, the SEC has had to kibosh every Bitcoin ETF proposal sent its way. Their major excuse was that the products don’t offer sufficient levels of investor protection. At that time, some of the companies have chosen to move on to other things, while others still hold on to hope that the agency’s stance on the products will somehow change.
Even agency officials have had problems with the stance of the SEC. Back in May, agency commissioner Hester M. Pierce chided the regulator for its policies, expressing her concerns that its knuckle-dragging on cryptocurrencies has led to nixed growth in the industry. As she put it, the agency has moved way too slow for the industry, and its lack of pace has only caused retarded growth in the space.
Clayton might think their “measured” approach is positive, but the signs sure show otherwise.