Amid a widespread regulatory offensive on the cryptocurrency market that has culminated in lawsuits against some of its largest participants, prominent Ripple and XRP advocate and legal expert John E. Deaton accused the United States Securities and Exchange Commission (SEC) of preferring the lack of clarity in the sector.
Specifically, Deaton pointed out that the watchdog’s chief Gary Gensler, although he bears most of the blame, was not the only one to point fingers at, arguing that “the SEC, as an agency, has lost its way,” as well as that it “institutionally prefers a lack of clarity and for the law to be vague,” as he said in a tweet shared on July 4.
Disagreements within SEC
Furthermore, he specified that the pro-crypto Commissioner Hester Peirce had argued for a Safe Harbor (provisions that sidestep or eliminate legal or regulatory liability in certain situations and under certain conditions) back in 2018 – five years ago – amid the “[initial coin offering (ICO)] craze,” but her agency had chosen to ignore her efforts, favoring the status quo.
As a reminder, Peirce is one of the most prominent crypto advocates in US regulatory agencies and has long advised the regulators to come up with clear rules that would allow individuals and businesses to participate in the digital asset sector without fearing they were breaking the law.
Notably, she has also urged the SEC to “stop denying categorically spot crypto exchange-traded products [(ETPs)],” referring to the Commission’s resistance to a spot Bitcoin ETP as “almost legendary” and “difficult to understand,” as Finbold reported in June 2022.
Moreover, the legal expert referred to the controversial speech by the former SEC corporate finance director William Hinman, who, against the advice of the General Counsel’s Office, proceeded to state that Ethereum (ETH) was not a security, giving it “a regulatory pass,” thus limiting the SEC’s position on the second-largest cryptocurrency in the future.
Favoring lack of clarity
Indeed, the SEC’s very resistance to Hinman offering more details on the issue of crypto assets seems to support Deaton’s argument that the SEC prefers to retain a lack of clarity and vague law for the sole purpose of insulating itself and keeping its options open in the future:
“The Hinman emails also show others arguing that Hinman should say less, not more, in order to allow the agency more options in the future. It’s all about the agency maintaining maximum prosecutorial options. Period.”
Meanwhile, the recent SEC cases against several crypto exchanges have raised fears among crypto traders and investors who have started to take down their crypto assets from these platforms en masse, leading to the lowest amount of Bitcoin (BTC) held on them in more than five years, as Finbold reported on June 27.
