The U.S. Securities and Exchange Commission’s (SEC) handling of cryptocurrency has been nothing short of a mess. Mark Uyeda, SEC Commissioner, made that clear during his appearance on ‘Mornings with Maria’ when he described their crypto policy as “a disaster.”
Instead of providing clear guidelines, the agency has focused on “policy through enforcement,” leaving the courts to make the real decisions.
“We’ve done nothing to provide guidance,” Uyeda admitted. This lack of direction has only created confusion in the market. Different courts have made different rulings, which doesn’t help the situation. And now, the lawsuits are piling up.
Crypto.com takes SEC to court
On Tuesday, Crypto.com filed a lawsuit against the SEC, accusing the agency of overstepping its authority.
The lawsuit points to a “Wells notice,” a formal warning from the SEC that claims crypto tokens are securities.
This could lead to enforcement action. But Crypto.com is fighting back, arguing that the SEC has crossed legal boundaries. In their statement, the exchange:
“The SEC has unilaterally expanded its jurisdiction beyond statutory limits and separately that the SEC has established an unlawful rule that trades in nearly all crypto assets are securities transactions.”
Just four months ago, Coinbase launched its own legal offensive, at both the SEC and the Federal Deposit Insurance Corporation (FDIC), demanding documents that would reveal how these agencies are handling crypto regulation.
The legal action targets what they call a “deliberate and concerted effort” by financial regulators to shut crypto firms out of the federal banking system.
According to Coinbase, the SEC and other agencies are pressuring banks to deny services to crypto businesses.
Uyeda had something to say about the arguments being made by companies like Coinbase. He described the focus on “non-material things that are not going to change the bottom line.”
He added that, “It’s about getting social change through independent financial regulators.” Without a solid understanding of what is and isn’t considered a security, it’s impossible to have productive discussions. “
And even when something does fall under the SEC’s jurisdiction, they need to decide how brokers are supposed to handle those securities.
Meanwhile, politicians are starting to take notice. Last month, top Republicans in the House sent a letter to SEC Chair Gary Gensler, with concerns about the agency’s actions.
Specifically, they questioned his decision to classify certain crypto “airdrops” as unregistered securities, which is simply absurd, to say the least.