The statement comes amid claims by Ripple Labs and other detractors that the SEC overstepped its bounds in policing the cryptocurrency sector.
In response to a recent opinion post by SEC chairman Gary Gensler, Ripple Lab’s general counsel Stu Alderoty argues that the agency’s crackdowns on the cryptocurrency sector aren’t safeguarding consumers.
Alderoty said that the SEC is “pushing aside his fellow regulators” in favor of focusing on providing regulatory clarity for cryptocurrency in an opinion post published in the Wall Street Journal (WSJ) on August 28 under the heading “The SEC Wants to Be America’s Crypto Cop.”
The SEC’s recent “shakedown” of BlockFi, which resulted in the firm winding up “up on the auction block” and two other comparable companies going “belly up,” was used as an example, he said, to make his point.
“Consumers weren’t protected, they were left holding the bag.”
The essay was written in reaction to Gensler’s post on August 19 titled “The SEC Treats Crypto Like the Rest of the Capital Markets,” which was also published in the Wall Street Journal and justified the regulator’s assault on the cryptocurrency business.
Although the SEC refers to itself as “the policeman on the beat” for cryptocurrency, the Ripple counsel claims that the SEC hasn’t offered enough clarification about crypto regulation.
He alleges that the chairman is “pushing aside his other regulators” and “front-running” President Biden’s executive order, which calls for regulators to work together on crypto regulation.
Alderoty was referring to the presidential order known as “Ensuring Responsible Development on Digital Assets,” which was signed on March 9, 2022, to make sure that the SEC and Commodity Future Trading Commission (CFTC) interact and collaborate on creating a regulatory framework for cryptocurrencies.
The SEC, according to Ripple, is “preserving its territory at the cost of more than 40 million Americans who are involved in the crypto economy,” rather than adhering to the presidential order or providing any “regulatory clarification for crypto.”
There is no reason to treat the cryptocurrency market differently from the rest of the capital markets simply because it employs new technology, according to Gensler, who stated in his piece that U.S. federal security regulations were created to safeguard investors.
The SEC’s determination to expand the size of its Crypto Assets and Cyber Unit workforce as well as the SEC’s “regulation by enforcement” philosophy, according to Forbes writer Roslyn Layton, are grounds for the opposite, although many detractors contend otherwise.
Earlier this month, U.S. Attorney John Deaton also charged wrongdoing, alleging that Gensler and the SEC had targeted cryptocurrencies on purpose and had gone beyond their authority to oversee them:
“It doesn’t take a constitutional law expert to understand that the SEC has limited jurisdiction over the crypto industry; barring congressional action, front line regulation of digital assets belongs with the Commodity Futures Trading Commission — the main regulator of investments that are not deemed traditional securities.”