As the head of the Securities and Exchange Commission continues to insist that crypto tokens should be largely regulated as securities under established commission rules, other leaders of the agency are taking issue with this approach, arguing instead for a formal rulemaking process to tailor new regulations for digital assets .
Commissioner Mark Uyeda called crypto regulation a “big, difficult and complex issue.”
Courtesy of the US Securities and Exchange Commission
In remarks Friday at the annual SEC Speak conference, Commissioner Mark Uyeda called crypto regulation a “large, difficult and complex issue that is conspicuously absent from the commission’s published regulatory agenda.”
Uyeda, a veteran SEC employee who was sworn in as commissioner in June, echoed the calls from
Coin base
and other industry players for clearer driving rules for a crypto sector they claim is fundamentally different from conventional securities.
“Market participants have expressed significant concerns regarding the lack of regulatory guidance in this area,” Uyeda said. “There is widespread concern that the lack of predictability regarding our regulations could encourage crypto firms to move to other jurisdictions.” A move abroad could kneecap a growing U.S. industry and send significant volumes of assets—and potential tax revenue—offshore.
Uyeda’s comments come a day after SEC Chairman Gary Gensler made a strong case that almost all crypto offerings are fundamentally the same as securities, and should be regulated accordingly. This attitude has led the SEC to take a number of enforcement actions against crypto firms for unregistered securities offerings.
But Uyeda and other critics of that approach label it “regulation by enforcement,” essentially accusing the commission of taking a shortcut by refusing to begin the process of writing new rules for crypto, which would involve a public comment period and a final vote of approval by the commissioners.
“To date, the Commission’s views in this area have more often been expressed through enforcement,” Uyeda said. “This is an example of a situation where regulation through enforcement does not produce the results that are achievable through a process involving public comment, because without the benefit of comments from crypto investors and other market participants, the Commission is unable to consider their perspectives in the development of an appropriate regulatory framework.”
The other Republican SEC commissioner, Hester Peirce, made a similar point in a speech in June, when she accused the commission of trying to “dismantle a regulatory framework through enforcement actions.”
“Enforcement is the appropriate tool to address the widespread fraud in the crypto space,” Peirce said. “However, one-time enforcement actions that represent the first time the Commission has publicly addressed a particular issue are not the right way to build a rulemaking.”
For now, however, these are minority votes in the commission. In the conference session immediately preceding Uyeda’s speech, Gurbir Grewal, the director of the SEC’s Division of Enforcement, made it clear that his staff will continue to pursue actions against crypto offerings using established securities laws.
“Not enforcing the most basic rules that underpin our regulatory structure would be a betrayal of trust, and that’s not an option for us,” Grewal said. “When the evidence we obtain indicates that these laws have been violated, we will continue to file lawsuits regardless of the label used or the technology involved.”
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