- SEC official defends increased vigilance over crypto companies due to their noncompliance with regulations.
- Critics argue SEC’s enforcement is excessive, generating a wave of criticism from digital asset firms.
- Lawsuits filed by SEC against Binance and Coinbase for alleged rule violations face strong denial.
On June 16, a U.S. Securities and Exchange Commission (SEC) official dismissed allegations of the regulator’s cryptocurrency crackdown and strongly condemned the sector for disregarding securities laws, reported global news platform Reuters.
During a gathering at Rutgers University and Lowenstein Sandler LLP in New York, Gurbir Grewal, the SEC’s enforcement director, defended the regulator’s increased vigilance over crypto companies, citing their noncompliance with the agency’s regulations as the primary reason.
The SEC’s firm approach to enforcement has generated a wave of criticism from both digital asset firms and advocates on Capitol Hill who argue that it represents an excessive exercise of regulatory authority.
Grewal stated:
We have worked thoughtfully and incrementally in this space. Typically you’d also see compliance but we’re not seeing that in this space, so we had to change strategies.
Gurbir Grewal, SEC enforcement director
The SEC initially directed its attention towards unregistered securities offerings, specifically targeting initial coin sales. However, the focus of the SEC has shifted to crypto firms that operate as unregistered exchanges and broker-dealers.
In response to the SEC’s actions, the crypto sector has expressed concerns regarding the inadequacy of the existing U.S. regulations and has advocated for the establishment of new rules. However, during the event on Friday, Grewal raised doubts about the effectiveness of such new rules in effectively addressing misconduct.
Grewal remarked, “Even if you came up with a custom-made set of rules, you are dealing with an entire industry that has been built on the foundation of noncompliance.”
In a recent development, the SEC filed lawsuits against Binance and Coinbase, two prominent global cryptocurrency exchanges, citing alleged violations of the regulator’s rules. These actions from the SEC are part of an ongoing trend of increased scrutiny and regulatory measures in the crypto industry under Democratic leadership.
Both Binance and Coinbase have firmly refuted the allegations made by the SEC. Furthermore, they have accused the regulatory body of abandoning previous cooperative efforts and obstructing attempts to find a resolution. Coinbase has specifically mentioned that the SEC’s approach became more rigid and less cooperative towards cryptocurrency firms following the FTX scandal that unfolded in late 2022.
