In response to a recent statement made by Gary Gensler, chairman of the Securities and Exchange Commission, Stu Alderoty, general manager of Ripple Labs, stated that consumers are left holding the bag as a result of shakedowns conducted by the SEC. In his response, he asserted that the regulator’s crypto market shakedowns are not consumer-protective.
In a Wall Street Journal (WSJ) opinion piece titled “The SEC Wants to Be America’s Crypto Cop” published on August 28, Alderoty alleged that the SEC is “pushing aside his follow regulators” rather than providing regulatory certainty for cryptocurrencies.
In arguing that SEC
shakedowns leave consumers holding the bag, he cited the SEC’s recent “shakedown” of BlockFi, which resulted in the firm ending up “on the auction block” and two other comparable companies going “belly up.” Below is the original statement:
Consumers were left holding the bag because they were not adequately protected.
This column was written in response to Gensler’s August 19 WSJ article, “The SEC Treats Crypto Like the Rest of the Capital Markets,” which justified the regulator’s assault on the cryptocurrency industry.
The Ripple counsel, on the other hand, asserts that the SEC has not provided sufficient clarification on crypto regulation and instead refers to itself as “the crypto cop on the beat.”
He believes that the chairman is “pushing aside his other regulators” and “rushing ahead” of President Biden’s executive order requesting cooperation from regulators regarding crypto regulation.
Alderoty is referring to the “Ensuring Responsible Development on Digital Assets” executive order, which was signed on March 9, 2022, to ensure that the SEC and the Commodity Futures Trading Commission (CFTC) coordinate and collaborate on the establishment of a crypto regulatory framework.
According to Aldetory, the SEC has not complied with the executive order and has not provided “regulatory clarity for crypto,” instead “protecting its territory at the expense of more than 40 million Americans participating in the crypto economy.”
In his article, Gensler argued that federal security regulations in the United States were created to protect investors and that “there’s no reason to treat the crypto market differently from other capital markets simply because it uses a different technology.”
Many opponents disagree, with Forbes writer Roslyn Layton citing the SEC’s intention to quadruple its Crypto Assets and Cyber Unit staff and its “regulation by enforcement” strategy in an opinion piece published on August 28.
This month, United States Attorney John Deaton also accused Gensler and the SEC of intentionally targeting cryptocurrencies and exceeding their regulatory authority:
It does not take a constitutional law expert to understand that the SEC has limited authority over the cryptocurrency industry. Absent congressional action, the Commodity Futures Trading Commission is the primary regulator of investments that are not considered traditional securities.
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