Crypto regulation determined by Congress, not the SEC: Blockchain Association
Despite attempts to control cryptocurrency through enforcement actions, US financial regulators are “bound by the legal reality” and Congress will eventually decide on crypto regulations as policy expert for crypto advocacy group Blockchain Association has suggested.
The association’s policy officer, Jake Chervinsky, shared his views in an extensive Twitter post on February 14. thread on the state of cryptopolitics.
He noted that neither the Securities and Exchange Commission (SEC) nor the Commodity Futures Trading Commission (CFTC) “have the authority to comprehensively regulate crypto.”
14/ No matter how many enforcement actions the SEC and CFTC come up with, they are bound by the legal reality:
Neither has the authority to regulate crypto, neither can get it through any kind of enforcement, and neither ever will without an act of Congress.
— Jake Chervinsky (@jchervinsky) 14 February 2023
Chervinsky thought an agreement on crypto legislation seems “unlikely, given the ideological gap between House Republicans and Senate Democrats.” He accused the SEC and CFTC of overstepping their authority in an effort to “get things done” without Congress.
Chervinsky urged the industry to remain calm following the recent spate of activity from “crypto’s chief antagonist,” the SEC, pointing to their crackdown on betting services as an example.
13/ The SEC’s main tactic is regulation by enforcement, and it struck again last week by labeling Kraken’s betting service as a security.
It’s frustrating, but it doesn’t change much for anyone else. Settlement is not the law and each set of facts is unique. Others will fight.
— Jake Chervinsky (@jchervinsky) 14 February 2023
The SEC’s February 9 settlement with crypto exchange Kraken, which banned the exchange from offering betting services to US clients, was publicly reprimanded by SEC Commissioner Hester Peirce.
In a dissenting opinion on February 9, Peirce argued that regulation by enforcement “is not an efficient or fair way to regulate” an emerging industry.
Related: US lawmakers and experts debate SEC’s role in crypto regulation
Chervinsky suggested litigation is one way the crypto industry can push for good policy, noting that the judiciary plays an important role in dictating policy that has been “ignored.”
20/ FIFTH, we can sue.
Policy is made in all three branches of government and we have ignored the judiciary for too long.
At the heart of crypto is a fight for civil liberties, a fight that requires impactful litigation.
Our best allies may be in the courts. Let’s find them.
— Jake Chervinsky (@jchervinsky) 14 February 2023
Crypto exchange Coinbase is also facing an SEC probe similar to the one that resulted in Kraken’s settlement.
Coinbase CEO and co-founder Brian Armstrong has taken a more resolute stance, arguing that getting rid of crypto stakes would be terrible for the US
Armstrong claimed in a February 12 Twitter post that Coinbase’s staking services are not securities and would “be happy to defend this in court if necessary.”
Coinbase’s staking services are not securities. We would be happy to defend this in court if necessary.https://t.co/GtTOz77YV3
— Brian Armstrong (@brian_armstrong) 12 February 2023
Judges’ rulings in landmark cases set a legal precedent. If such a case were brought to court and a judge ruled that Coinbase’s staking services are not classified as securities, other crypto companies in a similar position could use the precedent as part of their defense.
