In a Nov. 6 speech, Republican SEC Commissioner Mark Uyeda said the watchdog must reassess its approach to the crypto industry.
According to Uyeda, regulatory clarity is the need of the hour, and the SEC has the power to make it happen.
Proactive regulation
Speaking at an international event in London, Uyeda stated that the crypto industry needs a comprehensive regulatory framework, and that the SEC should turn to proactive regulation rather than relying on an enforcement-oriented approach.
He emphasized that the regulatory body could have taken a more active role in shaping legal and operational guidelines for the crypto sector, but had chosen to continue with a case-by-case enforcement strategy, resulting in extensive legal processes.
Uyeda said:
“Unfortunately, the SEC has not embraced this approach and has opted for a case-by-case strategy that involves lengthy legal proceedings.”
The crypto sector has consistently raised concerns about the lack of clear and uniform regulatory guidelines, arguing that this ambiguity makes it challenging for companies to operate compliantly while remaining competitive in the US market.
Enforcement-oriented approach
The SEC is currently embroiled in multiple legal disputes with leading cryptocurrency companies, including Coinbase, Binance, Ripple, and Tron, among others.
The watchdog has consistently rejected calls to create new rules for the sector, based on the reasoning that current securities laws are sufficient to cover cryptocurrencies. However, the regulator has not had much success in taking legal action against legitimate entities.
Meanwhile, in recent months, courts have ruled against the SEC in landmark lawsuits involving Grayscale Investments and Ripple. The former won the case against the SEC in October, with the president ruling that the regulator must withdraw his rejection of Grayscale’s spot Bitcoin ETF.
Meanwhile, Ripple is nearing a settlement with the watchdog after the court ruled that most XRP sales do not violate securities laws as they do not constitute securities sales. Essentially, the judge ruled that XRP was not a security when traded on the secondary market.
Lawyers expect the case to continue to swing in Ripple’s favor, while the victory in Grayscale will likely lead to approval of spot Bitcoin ETFs, including those from TradFi giants such as BlackRock and Valkyrie.
These ETFs are predicted to lay the foundation for institutional money to flow into the digital asset industry.