SEC’s ‘brute force’ crypto regulation attempt is ‘bad policy’ – Paradigm
Criticism of the United States Securities and Exchange Commission (SEC) is mounting as the agency remains persistent in its war against crypto.
On April 21, Web3 venture capital firm Paradigm published a policy paper on the problems with SEC filings.
It argued that SEC Chairman Gary Gensler’s “attempt to brute force cryptoassets that may not even constitute ‘securities’ into an ill-fitting disclosure framework is bad policy.”
The firm, which invests hundreds of millions in crypto and Web3 startups, said the SEC is failing to provide users and investors of cryptoassets with the information they need.
It also denied the SEC’s claims that it offers crypto entrepreneurs a viable path to compliance.
Paradigm points out that today’s disclosure policies were developed in the 1930s, long before the internet. It claims current guidelines are “tailored for centralized companies issuing securities” and that crypto markets are fundamentally different.
The firm noted that securities give the holder legal rights against a centralized entity, but there are no “legal rights” with most cryptocurrencies, but “technological capabilities in a protocol.”
In addition, cryptoassets can be completely independent of the issuer and maintain full functionality without their input.
Crypto assets can also be traded peer-to-peer and on a fundamentally different technology stack, unlike traditional securities and stocks that are traded on an “archaic system full of intermediaries.”
The venture firm concluded that the Norwegian Financial Supervisory Authority must change its current disclosure regime to incorporate new technologies and asset classes.
“Not surprisingly, without major changes to the SEC’s current disclosure regime, the SEC is unable to effectively regulate the cryptoasset markets.”
Paradigm is not the only representative of the crypto industry that has been critical of the SEC and its policies.
Related: Gary Gensler’s SEC is playing a game, but not the one you think
Congressman Warren Davidson has also been vocal about the agency and its chief “police on the beat.”
On April 16, the pro-crypto politician introduced legislation “to correct a wide range of abuses” aimed at replacing Gensler with a CEO who reports to the board.
In an April 18 hearing on SEC oversight, Gensler was grilled by House Financial Services Committee Chairman Patrick McHenry. “Clearly, an asset cannot be both a commodity and a value,” McHenry said when Gensler declined to decide what he considers the classification of Ether (ETH).
Blade: Crypto Regulation: Does SEC Chairman Gary Gensler Have the Last Word?
