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In response to a recent opinion post by US Securities and Exchange Commission chairman Gary Gensler, general counsel at Ripple Labs Stu Alderoty argued that the regulator's crackdowns on the cryptocurrency sector weren't protecting consumers.
The Wall Street Journal (WSJ) published an opinion article on Monday headlined "The SEC Wants to Be America's Crypto Cop" in which Alderoty alleged that the SEC is "pushing aside his follow regulators" rather than focusing on giving regulatory certainty for cryptocurrency.
He used the recent "shakedown" of BlockFi by the SEC as an example, stating that it caused the company to wind up "up on the auction block" and two other comparable companies to "belly up," leading to the following conclusion:
“Consumers weren’t protected, they were left holding the bag.”
The essay was written in response to Gensler's "The SEC Treats Crypto Like the Rest of the Capital Markets" article from August 19 in the Wall Street Journal, which justified the regulator's efforts to suppress the cryptocurrency market.
The Ripple counsel, on the other hand, claims that the SEC hasn't been sufficiently clear about cryptocurrency regulation and positions itself as "the cop on the beat" for cryptocurrency.
President Biden's executive order, which calls on regulators to work together on crypto regulation, is allegedly being "front-run" by the chairman, who is allegedly "pushing aside his colleagues regulators."
The "Ensuring Responsible Development on Digital Assets" executive order, to which Alderoty referenced, was signed on March 9, 2022, to make sure that the SEC and Commodity Future Trading Commission (CFTC) coordinate and work together to build a regulatory framework for cryptocurrencies.
Aldetory asserts that the SEC is instead "protecting its turf at the expense of more than 40 million Americans in the crypto economy" and has not only disregarded the executive order but also failed to provide any "regulatory certainty for crypto."
Gensler claimed in his piece that there is "no reason to treat the crypto market differently from the rest of the capital markets just because it uses a different technology" and that U.S. federal security regulations were created to safeguard investors.
The SEC's plan to quadruple the size of its Crypto Assets and Cyber Unit workforce and its "regulation by enforcement" philosophy, according to Forbes writer Roslyn Layton, are reasons for the opposite, although many detractors contend otherwise.
In a separate allegation made earlier this month, U.S. Attorney John Deaton charged that Gensler and the SEC had targeted cryptocurrencies on purpose and had gone beyond their authority to oversee them:
“It doesn’t take a constitutional law expert to understand that the SEC has limited jurisdiction over the crypto industry; barring congressional action, front line regulation of digital assets belongs with the Commodity Futures Trading Commission — the main regulator of investments that are not deemed traditional securities.”
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