SEC commissioner says agency’s approach to crypto has been a ‘disaster’

SEC Commissioner Mark Uyeda criticized the agency’s approach to crypto regulation and acknowledged that it has been a “disaster for the whole industry.”

He made the statement on Oct. 9, during an appearance on the Fox Business show “Mornings with Maria,” in response to questions about the SEC’s recent actions against prominent crypto firms.

Reliance on enforcement

Uyeda said the SEC has chosen to take enforcement actions without providing regulatory clarity to crypto companies, which has contributed significantly to the current uncertain landscape in the US. He added:

“We’ve implemented ‘policy through enforcement’ without offering guidance. As a result, courts have had to intervene, leading to inconsistent rulings.”

His remarks came in the wake of a lawsuit filed by Crypto.com, which accused the SEC of overstepping its jurisdiction by treating most crypto tokens as securities. The lawsuit argued that the regulator had unilaterally expanded its authority and called for clearer regulatory boundaries.

Uyeda refrained from commenting directly on the case but acknowledged broader issues within the SEC’s approach to digital assets. He emphasized the lack of interpretive guidance on how digital assets should be treated under existing securities laws.

According to Uyeda:

“There’s a growing frustration with the absence of guidance on what’s permissible and how to comply with securities regulations.”

Legal tussles

The legal challenge is the latest in a series of confrontations between crypto firms and regulators. In March, Coinbase also took legal action against the SEC, aiming to clarify the regulatory treatment of digital assets.

Meanwhile, the agency’s lawsuit against Ripple Labs has taken a new turn after the SEC filed an appeal to overturn the ruling that XRP sales to retail investors did not violate securities laws.

Both companies have expressed concerns about the agency’s enforcement tactics.

Uyeda emphasized the importance of establishing clearer regulations moving forward, particularly as the crypto industry continues to evolve. He stated:

“You can’t begin to address these issues without first defining what falls under securities laws and what doesn’t.”

The SEC has faced increasing scrutiny from lawmakers, with top House Republicans recently questioning Chair Gary Gensler’s classification of certain crypto-related activities as securities offerings.

Uyeda’s comments echo those of Commissioner Hester Peirce during the Congressional hearing when she similarly criticized the SEC for failing to provide clarity to the industry.

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