On Thursday, the United States Securities and Exchange Commission (SEC), issued a notice warning crypto investors. The regulator has often appeared to be cold towards cryptocurrencies and does not appreciate their promotion.
In the notice released Thursday, the SEC’s Office of Investor Education and Advocacy cautioned investors about crypto asset securities. The regulator stated that crypto investments can be “exceptionally volatile and speculative, and the platforms where investors buy, sell, borrow, or lend these securities may lack important protections for investors.”
As stated by the SEC in its notice, no crypto exchange has regulated itself in the market. The registrants include broker-dealers, investment advisers, alternative trading systems (ATS), and, of course, exchanges. The SEC also makes note of lending and staking of crypto assets.
While the recent warning is to caution investors, sources see it as a gist of the larger negative sentiment of the regulator towards cryptocurrencies. More often than not, members of the crypto community as well as lawmakers have criticized Gary Gensler, the chair of the SEC for having an anti-crypto stringent approach towards the sector.
Some in the crypto community have even said that the SEC Chair and others have launched a hostile mission against crypto exchanges and companies. The regulator has been carrying an extremist enforcement-oriented approach towards crypto entities. Data suggested that in 2022, the SEC brought a record number of enforcement actions and is now planning to expand its digital assets enforcement team.
Usually, the SEC and its executives counter the remarks of bias and anti-crypto by saying it is only trying to fulfill its responsibility and protect investors. While many crypto companies have acknowledged that the crypto market does need more rules, it disagrees with the SEC’s regulation-by-enforcement approach.
In February the regulator targeted firms like Kraken and Paxos. It sent a Wells Notice to Paxos and accused it of selling unregistered security. The firm later announced that it was having talks with the SEC. On Tuesday, Coinbase became the latest crypto entity to come under the regulator’s radar SEC had sent it a Wells Notice. The popular exchange has been trying to work with the SEC on regulations.
Several renowned personalities including the CEO of the BLockchain Association criticized the regulator’s approach and called on urgent intervention from the lawmakers even if that meant delays in legislation. Notably, the commissioner of the SEC, Hester Pierce has also criticized the regulator for having such an enforcement-oriented approach to regulation.
Most recently, At the DC Blockchain Summit, French Hill, a Republican lawmaker, slammed the US Congress regarding cryptocurrency regulations. He said that the crypto businesses which wish to settle in the country would be forced to shift and the regulating agencies and their stringent approach would be responsible for this.
However, crypto companies have urged the SEC to offer more clarity on regulation so that they may better operate within the law given the lack of substantial clarity on legislation. Recently, the commissioners of the Commodity Futures Trading Commission (CFTC) also urged lawmakers to force regulators to work unanimously on crypto regulation.