Ripple’s Chief Technology Officer (CTO), David Schwartz, recently took aim at the Securities and Exchange Commission (SEC) for its regulatory approach in light of Coinbase’s recent legal victory over the agency. In a tweet, Schwartz highlighted the SEC’s lack of clarity, which he believes fails to provide ample notice and violates due process requirements.
The excerpt shared by Schwartz criticized the SEC for applying broad rules to a diverse cryptocurrency industry. The Commission’s focus on cryptocurrencies that resemble traditional stocks has led to overlooking the unique characteristics of stablecoins, utility tokens, and other digital assets like Bitcoin and Ether.
The crypto industry has been vocal in its demand for tailored regulations that take into account the nuances of different cryptocurrency assets. The lack of clarity from the SEC has left issuers and exchanges operating without a clear understanding of whether their activities could face future regulatory action.
Coinbase’s Chief Legal Officer (CLO), Paul Grewal, emphasized the court’s recent decision on a writ of mandamus filed by the crypto exchange at the Third Circuit. The court found the SEC’s order to be conclusory and insufficiently reasoned, deeming it arbitrary and capricious. As a result, the court partially granted Coinbase’s petition and remanded it back to the SEC for a more detailed explanation.
Many stakeholders within the crypto industry have criticized the SEC’s regulatory approach, arguing that applying traditional stock rules to cryptocurrencies is limiting. They believe that the novelty and uniqueness of cryptocurrencies require a specialized regulatory framework tailored to the industry’s specific needs.
With the recent presidential election results, analysts anticipate potential policy changes under Donald Trump’s administration that could prioritize crypto regulations. This could include appointing a new SEC chair to replace Gary Gensler and implementing clearer policies to support blockchain and digital assets.
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