New court ruling could tie SEC’s hands to crypto

Gary Gensler, chairman of the Securities and Exchange Commission (SEC),’s ongoing campaign against the cryptocurrency industry, which he calls “the wild west of finance,” may have just gotten into trouble at the Supreme Court.

While the 6-3 ruling concerned a case involving the Environmental Protection Agency (EPA)’s ability to regulate air pollution, the court promulgated a regulation that would limit carbon dioxide emissions to a level that would drastically reduce the amount of coal-fired electricity to a federal appeals court.

But the court’s majority view in West Virginia v. EPA was broad enough to drastically limit the way agencies like the SEC exercise their regulatory authority beyond congressional control.

This may well have an impact on the cryptocurrency industry, which is regulated by agencies trying to force it into existing regulations that it does not fit, spokesmen for the crypto industry have argued for years.

“Today’s #SCOTUS decision challenges the regulatory approach to enforcement that the digital asset industry has been forced to navigate,” said Perianne Boring, CEO of the Chamber of Digital Commerce, a crypto-industry association. so on Twitter. “Without clear congressional authorization, federal agencies must tread carefully.”

Today #SCOTUS the decision challenges the enforcement approach regulation that the digital assets industry has been forced to navigate. Without clear congressional authorization, federal agencies must tread carefully.

– Perianne (@PerianneDC) June 30, 2022

In a statement to CNBC, she added that the ruling “should at least give regulators a break in trying to establish guidelines that go beyond their roles imposed by Congress, especially with new innovations with great economic potential.”

The industry specifically protests against the SEC’s decision that virtually all cryptocurrencies are securities under its jurisdiction. This has led to enforcement measures that effectively shut down the initial coin offering (ICOs) that financed the growth of the industry during the first major crypto boom in 2017-2018.

This is an argument that Gensler has lost recently, after a bill from the two-part Senate recommended giving control of most cryptocurrencies to the Commodity Futures Trading Commission (CFTC).

Read more: SEC Leader: All agencies that regulate crypto should follow “one rulebook”

Hostility on both sides

Recently, the SEC has used the authority it claims to crack down on the crypto-lending industry – and force Coinbase to withdraw plans to enter it and get BlockFi to agree to a $ 100 million settlement – with its ongoing refusal to allow and spotbitcoin. exchange traded fund (ETF).

One of the things that upset Coinbase CEO Brian Armstrong was that the agency would not even explain why it threatened to sue the top crypto exchange if it launched Coinbase Lend, which would have offered customers up to 4% annual return on deposits.

See also: The SEC’s campaign against cryptocurrencies is growing beyond Coinbase

In a Twitter July 1 thread on the SEC’s enforcement decisions this year, wrote lawyer Jake Chervinsky, head of policy at the Blockchain Association: “Throughout the government, almost everyone is in line behind the smart national strategy that [President Joe Biden set out in an executive order about crypto regulation] to go thoughtful and act consciously. And almost everyone understands that only Congress can answer big questions like how to regulate crypto. “

Everyone “except the SEC,” he added.

1 / About what to expect from the SEC:

Despite all the fears and predictions about a “regulatory breach” of crypto in the US, and despite historically poor market conditions (to put it mildly), we saw no major government action in H1 2022. I feel good about this.

H2 2022 may be different.

– Jake Chervinsky (@jchervinsky) July 1, 2022

“We all saw the SEC’s blatant hostility to crypto in H1 … Unfortunately, I expect it to get worse in H2,” Chervinsky wrote. “The SEC appears to be waging war on crypto on two fronts: regulation and enforcement.”

In a statement to CNBC following the EPA decision, Chervinsky said that “the decision signals that the Supreme Court will not take kindness to regulatory agencies such as the SEC that seek to redraw their own jurisdictional boundaries beyond what Congress clearly intended.”

He added that he thought it was likely that the Supreme Court would crack down on rules the SEC has proposed and enforced on the crypto industry.

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