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- 1 SEC’s recent lawsuits against crypto entities get discussed by Jay Claton and Timothy Massad.
- 2 The duo suggested specific changes to regulate the crypto industry.
In a recently published article, CFTC’s and SEC’s ex-chairs shared their views on the regulatory crackdowns and lawsuits against the crypto industry. Jay Clayton, former chair of the Securities and Exchange Commission (SEC), and Timothy Massad, former chair of the Commodities Futures Trading Commission (CFTC), co-authored an article in the Wall Street Journal on July 7, 2023, discussing crypto regulations.
SEC, CFTC & Crypto Regulations
The two regulatory agencies are in a brawl with each other for regulating the crypto industry. If the assets are classified as commodities, like Bitcoin or Ethereum, they fall under the jurisdiction of the CFTC. But if they are classified as securities, then the SEC has the policing authority over them.
The regulatory actions by the SEC on the crypto industry surged by around 183% after the FTX-saga. This increase in the cases does not include the recently filed lawsuits against the world’s biggest crypto exchange and coin base. Alleging them of dealing in unregistered securities, etc. These lawsuits and actions created a hostile environment for the industry in the states.
Clayton argues that these lawsuits need to address whether the existing laws should be amended to deal with particular features of digital assets. Or if the United States needs a whole new regulatory framework.
The duo frequently pen their thoughts on various topics related to the industry; on June 7, their article circulated digital asset regulations. Citing the recent lawsuits, the duo argues that a judge should not “address the board and technical questions of a market structure and operation in the context of a case that hives on the classification of a particular token.”
Without naming the regulatory agency in an interview, the former chair of the financial watchdog in the United States argued that they are filing suits they might lose. He also slammed the agency for instilling regulations by enforcement methods. Coinbase’s chief argued a while ago that the lack of clarity in the rules could make crypto firms go offshore.
Trying to provide suggestions on the current scenario, the duo argue about the requirement of crypto intermediaries. This approach could help in the implementation of rudimentary consumer protection. Also, it should be able to provide some regulatory rules around the usage of stablecoins which might assist in enforcing the law.
The former chairs of the two regulatory bodies suggest that instead of fighting with each other for jurisdiction over cryptocurrencies, they should come to a truce and work together towards developing a comprehensive regulatory framework for the crypto industry. This could be a similar exercise during which the two parties bring in bi-partisan bills in specific scenarios.
On June 13, 2023, the Hinman documents were unsealed, covering the speech delivered by the former SEC director. It argues that the agency might need to be more suitable to govern digital assets. During his 2018 speech, Hinman spoke about the classification of cryptocurrencies, which reignited the debate on cryptocurrency classification as this was the main criterion in many recent lawsuits.
Rep. Warren Davidson (R-Ohio) and Rep. Tom Emmer (R-Minn) introduced the SEC Stabilization Act in the United States House of Representatives on June 12, 2023. The bill seeks significant changes in the agency, including replacing its currency chair Gary Gensler.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
