Despite efforts to police cryptocurrency through enforcement actions, the financial regulator of the United States is “bound by legal reality” and Congress will finally decide to rule crypto policy experts for the crypto advocacy group Blockchain Association has suggested.
The association’s chief policy officer, Jake Chervinsky, shared his views in an extensive February 14 Twitter post. thread in the country of crypto policy.
He noted that the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) “have the authority to fully regulate crypto.”
14/ No matter how many enforcement actions the SEC and CFTC bring, they are bound by legal facts:
It does not have the authority to fully regulate crypto, nor can it take over the amount of enforcement, and will not have it without an act of Congress.
– Jake Chervinsky (@jchervinsky) February 14, 2023
Chervinsky believes that an agreement on crypto legislation seems “impossible, given the ideological gap between House Republicans and Senate Democrats.” He accused the SEC and CFTC of overstepping their authority in an effort to “get it done” without Congress.
Chervinsky called for the industry to remain calm after the recent flurry of “crypto’s main antagonist,” the SEC, and pointed to the crackdown on staking services as an example.
13 / The SEC’s primary tactic is regulation by enforcement, and it did so again last week by labeling Kraken’s staking service as a security.
It’s frustrating, but it doesn’t change much for anyone else. Settlements are not laws, and each set of facts is unique. Others will fight.
– Jake Chervinsky (@jchervinsky) February 14, 2023
The SEC’s February 9 settlement with crypto exchange Kraken, which banned the exchange from offering staking services to US customers, was publicly rebuked by SEC Commissioner Hester Peirce.
In his February 9 dissenting statement, Peirce argued that regulation by enforcement is “not an efficient or fair way of regulating” the developing industry.
related: US lawmakers and experts debate SEC’s role in crypto regulation
Chervinsky suggested litigation as one way the crypto industry can push for good policy, noting that the courts play an important role in dictating policy that has been “ignored.”
20 / FIVE, we can litigate.
Policy is made in all three branches of government, and we have long ignored the courts.
The core of crypto is the fight for civil liberties, a fight that requires impact litigation.
Your best ally may be in court. Let’s find out.
– Jake Chervinsky (@jchervinsky) February 14, 2023
Crypto exchange Coinbase is also facing an SEC probe similar to what led to the Kraken settlement.
Coinbase CEO and co-founder Brian Armstrong has taken a more assertive stance, claiming that getting rid of crypto staking would be bad for the US.
Armstrong argued in a February 12 Twitter post that Coinbase’s staking service is not a security and would be “happy to defend this in court if necessary.”
Coinbase’s staking service is not a security. We will be happy to defend this in court if necessary.https://t.co/GtTOz77YV3
— Brian Armstrong (@brian_armstrong) February 12, 2023
The judge’s ruling in the landmark case set a legal precedent. If the case goes to court and the judge decides Coinbase’s staking service is not classified as a security, other crypto companies in the same position could use the precedent as part of their defense.