The House Financial Services Committee recently heard testimonies regarding the regulation of digital asset markets, particularly focusing on drafts surrounding crypto market structure and stablecoin regulation. In addition, discussions considered the ramifications of the U.S. Securities and Exchange Commission’s (SEC) ongoing lawsuit against Coinbase. Aaron Kaplan, co-founder and CEO of Prometheum, a digital asset securities platform in accordance with the Financial Industry Regulatory Authority (FINRA) and SEC, stated that existing securities laws are sufficient for crypto market regulation. This echoes the viewpoint of SEC Chair Gary Gensler.
While some lawmakers believe that Kaplan’s platform is a testament to Gensler’s sincerity in encouraging exchanges to register, others view this situation as a bureaucratic catch-22. According to the skeptical perspective, the SEC envisions a regulated crypto exchange that does not actually facilitate the buying or selling of cryptocurrencies. During the committee hearing, Representative Mike Flood (R-NE) queried Kaplan about Prometheum’s allowances for buying and sellingether (ETH) and bitcoin (BTC). Kaplan admitted that the platform does not currently offer these assets.
At present, Prometheum does not have a clear listing of assets it intends to provide. Its website includes tokens related to the Flow, Filecoin, The Graph, Compound, and Celo protocols, though these appear to be hypothetical examples. Furthermore, the company plans to cater only to accredited investors and not the general public. In light of these shortcomings, Flood argues that the SEC’s current approach does not provide a clear path for crypto exchanges.
The hearing also brought to attention some obstacles presented by the SEC’s current stance. Prometheum’s limitation to accredited investors means that it cannot efficiently serve as a means of dispersing cryptocurrencies to their intended users. Lawyer Coy Garrison, former counsel to SEC Commissioner Hester Peirce, emphasized that the application of securities laws to crypto assets would be excessively burdensome and counterproductive.
Prometheum may be permitted to sell tokens to institutions and larger investors, but without a legal method of distributing the assets to everyday users, their value becomes questionable. The SEC’s current approach appears to disregard the functionality of these tokens, with Blockchain Association CEO Kristin Smith stating that the SEC’s method “adds a tremendous amount of friction to the system.”
While some crypto enthusiasts argue for a reexamination of classifications to better fit the structuring of digital asset markets, the SEC is under no obligation to modify its legislation. Nevertheless, the hearing shed light on the ongoing argument surrounding crypto asset regulations and the need for more appropriate frameworks.
Source: Coindesk
