The US Securities and Exchange Commission\u2019s sole Democratic Commissioner has said the agency is \u201cplaying a game of regulatory Jenga\u201d with its approach to the crypto industry and market regulation under the Trump administration. <\/p>\n
In May 19 remarks<\/a> at the SEC Speaks event, Commissioner Caroline Crenshaw cautioned against what she described as a dangerous dismantling of \u201cdiscrete but interrelated rules\u201d on crypto and the wider market.<\/p>\n She likened market stability to a \u201cJenga tower\u201d that the agency\u2019s rules had \u201ccarefully developed over the years,\u201d which could topple if some rules were removed.<\/p>\n In addition to a lamentable loss of staff, Crenshaw said the SEC has used staff guidance to effectively reverse rules without proper analysis or public comment, particularly around crypto<\/p>\n \u201cOur statements on these crypto-related issues are the equivalent of a wink and nod intended to convey that we do not plan to rigorously apply our laws in certain, specific situations.\u201d<\/p>\n She added that the regulator has abandoned enforcement actions, especially in crypto markets, creating what she calls \u201cregulation by non-enforcement.\u201d<\/p>\n \u201cI am deeply troubled by the Commission\u2019s abandonment of swaths of our enforcement program,\u201d she said.\u00a0<\/p>\n SEC Commissioner Crenshaw. Source: SEC<\/em><\/p>\n Crenshaw, the SEC\u2019s last remaining Democrat commissioner, said the agency\u2019s \u201cabout-face\u201d is problematic for a host of reasons, such as corroding its reputation in court, undermining its credibility, and casting doubt on the state of \u201clongstanding and fundamental case law.\u201d<\/p>\n Related: <\/strong><\/em>SEC is scaling back its crypto enforcement unit: Report<\/strong><\/em><\/a><\/p>\n Crenshaw, who had also opposed the SEC\u2019s settlement<\/a> with Ripple, said in her latest remarks that the 2022 FTX collapse<\/a> was an example of what a \u201clarge-scale crypto crisis\u201d can look like.\u00a0<\/p>\n \u201cThose risks have not gone away, but the calls for serious regulatory scrutiny are a lot quieter these days,\u201d she said.<\/p>\n \u201cFailing to appreciate and address these risks and complexities destines us to repeat hard lessons with high stakes as crypto becomes increasingly entangled with traditional finance.\u201d<\/p>\n In comparison, remarks from the SEC\u2019s Republican commissioners welcomed the agency\u2019s embrace of the crypto sector.\u00a0<\/p>\n SEC chair Paul Atkins said at the SEC Speaks event<\/a> that \u201ccrypto markets have been languishing in SEC limbo for years,\u201d adding that the agency should not be in the business of stifling innovation of crypto companies.<\/p>\n Commissioner Hester Peirce, who heads<\/a> the SEC\u2019s Crypto Task Force, said<\/a> in remarks that the agency\u2019s approach under the Biden administration has \u201cevaded sound regulatory practice and must be corrected.\u201d<\/p>\n She also claimed that crypto did not come under the purview of securities laws because \u201cmost currently existing crypto assets in the market\u201d are not securities.\u00a0<\/p>\n \u201cEven if a broad swath of the crypto assets trading in secondary markets today were initially offered and sold subject to an investment contract, they clearly are no longer bought and sold in securities transactions. Many of these crypto assets are functional.\u201d<\/p>\n Commissioner Mark Uyeda echoed the sentiment of his peers, stating<\/a> that the SEC \u201cshould undertake efforts to provide assurances that regulation by enforcement will not be a tool used for future policymaking.\u201d<\/p>\nCrypto was \u201clanguishing in SEC limbo\u201d<\/h2>\n