SEC Crypto Enforcement Stocks On Track To Surpass 2022

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The Securities and Exchange Commission (SEC) is not backing down on cryptocurrency regulation by enforcement.

While the crypto industry has criticized the SEC for not engaging in formal rulemaking or waiting for Congress to pass a clear legal framework around US securities laws and their applicability to assets digital, the agency under its current chairman, Gary Gensler, has continued to bring in singular enforcement measures as a means of establishing regulatory policy.

In 2022, the Gensler-led agency filed a total of 30 cryptocurrency-related enforcement actions, up 50% from 2021.

In the first few months of 2023, the SEC issued 13 enforcement actions, which is on track to increase more than 25% from last year’s numbers.

In addition to shifting the focus from individual tokens to trading platforms that cater to US investors, Gensler has separately increased the number of law enforcement attorneys in the company’s crypto unit. SEC, a decision that observers say indicates the SEC Chairman intends to pursue further charges in the coming months. his agency rakes as wide as possible.

The SEC’s 43 actions in the past 16 months represent more than 30% of the full history of 140 crypto-related enforcement actions, dating back to the SEC’s first-ever crypto enforcement action in July. 2013.

The most frequent charges levied by the agency were related to unregistered securities offerings (73%), suspected fraud (70%) or both (50%), and, not counting this year’s actions, represent $2.61 billion in total settlements and penalties.

Also Read: SEC Chairman Gensler Defends Crypto Crackdown in Contentious Hearing

An Apparent Pursuit of Crypto Regulation Through Litigation

Industry watchers, as well as market participants, are increasingly of the view that federal regulators will continue to come down hard on big crypto companies to set precedents for new regulation this year.

We are 100% committed to the United States because the rule of law prevails here, Coinbase CEO Brian Armstrong told investors during the company’s first quarter 2023 earnings call Thursday, May 4. , emphasizing that it’s really important for America to get this. [crypto regulation] LAW.

From the SEC’s perspective, the regulations are already in place and companies need to recognize this overriding fact by coming into compliance.

Since most crypto tokens are securities, it follows that many crypto intermediaries transact in securities and must register with the SEC, Gensler told the House Financial Services Committee on last month, adding that the crypto industry currently has risks and conflicts that the commission does not. authorized in any other market.

Gensler told the assembled lawmakers at the time that the SEC has a clear regulatory framework built on 90 years. [Crypto companies] no choice. They are generally non-compliant and need to come into compliance.

But Gensler’s views on crypto are not without detractors, both among policymakers and within the SEC chairmen’s own agency.

To date, the SEC has forced digital asset market participants to adopt regulatory frameworks that are neither compatible with the underlying technology nor enforceable, members of the Congressional Financial Services Committee wrote in a letter to Gensler. .

A commission serious about regulating, not destroying, this market would reflect on this nearly spotless record of regulatory failure and do something about it, SEC Commissioner Hester Pierce said in a dissent titled Rendering Innovation Kaput.

See also: Hearings on Cryptos regulatory loopholes do little to close them

Let the courts decide

Coinbase helped lead the industry’s response to the SEC’s review, repeatedly asking the agency for clarification on the regulatory framework applicable to various digital assets.

The United States cannot afford to fall behind on this important technology that can update the financial system and save 1 million jobs in America, Armstrong said Thursday. Our preferred path would be for Congress to take action to provide clear rules of conduct for the industry, including empowering the SEC, CFTC and other regulators to regulate our industry under a consistent regulatory framework.

Although Gensler has often stated that he believes anything other than bitcoin is a security, the SEC itself has not codified this position. A new lawsuit from Coinbase aims to change that.

Since last July, Coinbase has asked the SEC to respond in turn to its comprehensive petition letter for SEC regulation asking the commission to propose and adopt rules to govern the regulation of securities that are offered and traded. through digital native methods, including potential rules to identify which digital assets are securities.

Coinbase Chief Legal Officer Paul Grewal tweeted on Wednesday May 3 that the SEC was ordered by a US court to file its response to Coinbase within 10 days. This means that some certainty may be on the horizon, but honoring that certainty may be an entirely different matter.

The Third Circuit just issued a verbatim order directing the SEC to file a response to our mandamus motion within 10 days (and gave us 7 days for a response). Here is the text of the command:

ORDER IN TEXT ONLY (Registrar) At the request of the Court, the respondent is ordered to file a

paulgrewal.eth (@iampaulgrewal) May 3, 2023

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