SEC Commissioners Hester Peirce and Elad Roisman said in a joint statement that Gary Gensler’s recently released Regulatory Flexibility Agenda falls short of providing much-needed regulatory clarity on crypto and digital assets.
The Commissioners said that while Gensler’s agenda was ambitious, they were ultimately “disappointed with its content.”
While the statement was directed at the agenda in general, the Commissioners made special mention of digital assets.
“The Agenda also comes up short on furthering the investor protection prong of our mission by failing to provide more clarity on digital assets. First, the Agenda makes no mention of any regulation with respect to digital assets.”
Despite the sector growing exponentially in “size, complexity, diversity, and investor interest,” the SEC is failing to provide any clarity and therefore empowering fraud and stifling innovation.
“Rather than taking on the difficult task of formulating rules to allow investors and regulated entities to interact with digital assets, including digital asset securities, the Agenda—through its silence on crypto—signals that the market can expect continued questions around the application of our securities laws to this area of increasing investor interest. Such silence emboldens fraudsters and hinders conscientious participants who want to comply with the law.”
Gensler has previously encouraged entities in the crypto space to “come in and talk” to the SEC in regards to regulation, though many are perplexed as to what he means.
“I’ve said publicly, come in, work with the SEC, get registered. They are fundamentally exchanges, but they also have this other activity going on inside of it. It’s really important to get that investor protection,” he said in a Wall Street Journal report.
In June, Coinbase was prevented from launch a new lending platform called Lend due to threats from the SEC. According to the US exchange’s chief legal officer Paul Grewal, coming in and talking to to the SEC didn’t work out so well. The regulator reportedly asked Coinbase to provide excessive amounts of paperwork and documents, including the names and contact information of each person who signed up for the Lend waitlist (which Grewal says was not given).
“The SEC has repeatedly asked our industry to ‘talk to us, come in.’ We did that here. But today all we know is that we can either keep Lend off the market indefinitely without knowing why or we can be sued. A healthy regulatory relationship should never leave the industry in that kind of bind without explanation. Dialogue is at the heart of good regulation.”