The US SEC has filed a motion for judgment against Kraken, with the objective of restricting the scope of discovery regarding crypto policy.
The U.S. Securities and Exchange Commission (SEC) has submitted a motion for judgment in its lawsuit against Kraken, a cryptocurrency exchange. The motion emphasizes defenses such as the “major questions doctrine” and “fair notice.”
The objective of this initiative, which is being spearheaded by the team of SEC Chairman Gary Gensler, is to restrict the agency’s regulatory policies, with a particular emphasis on those that impact the crypto sector, from further disclosure. The timing of the filing has garnered attention, as some in the industry perceive it as a strategic attempt to protect the SEC’s methods from a more thorough examination.
US SEC Submits motion for judgment against Kraken
The US SEC’s motion aims to dismiss Kraken’s defenses, which include the fair notice defense and the significant questions doctrine. The fair notice defense contends that Kraken did not receive sufficient regulatory guidance in relation to its crypto-related activities.
In the interim, the major questions doctrine posits that regulatory agencies, including the SEC, should refrain from making significant policy decisions in the absence of explicit guidance from Congress.
Consequently, the US SEC’s motion appears to be designed to obstruct further investigation into its policies, which Kraken and other crypto advocates have criticized as inconsistent and ambiguous.
The US SEC was unsuccessful in obtaining a judgment in the Ripple case, despite the filing of a comparable motion. Michael O’Connor, an attorney who represents Kraken, anticipates a comparable result in the Kraken case. However, Kraken has disclosed that it has additional defenses in the event that this motion is pursued.
Timing of the motion raises concerns in political change context
The timing of the SEC’s motion has prompted discussion, particularly in light of recent political developments. Following Donald Trump’s victory in the 2024 U.S. presidential election, Gary Gensler’s tenure as SEC Chair may be reaching its conclusion.
The potential for changes in the agency’s leadership and approach to crypto regulation was previously indicated by Donald Trump’s expressed intention to replace Gensler.
Michael O’Connor contends that the US SEC’s motion may be an effort by Gary Gensler’s team to advance its regulatory posture prior to the inauguration of a new administration. At the same time, Galaxy CEO Mike Novogratz has proposed that Commissioner Hester Peirce, who is recognized for her pro-crypto stances, could be a viable candidate for the SEC Chair under the new administration.
Industry Leaders Advocate for Regulatory Reform
The crypto industry has been vocal in its demand for regulations that are more consistent and transparent, particularly in light of the US SEC’s ongoing “regulation by enforcement” strategy. Novogratz, during an appearance on CNBC, expressed his endorsement of Hester Peirce for the position of SEC Chair, citing her consistent advocacy for a more transparent regulatory framework.
Stuart Alderoty, Ripple’s Chief Legal Officer, also expressed his endorsement of regulatory reform, positing that the forthcoming Trump administration has the potential to establish the United States as a leader in the crypto sector.
Brad Garlinghouse, the CEO of Ripple, has also expressed comparable sentiments, proposing a reform agenda that encompasses the replacement of Gensler and the establishment of a more favorable regulatory environment for blockchain technology.
