Secondary crypto markets have recently come under the spotlight of the United States securities regulator, the Securities and Exchange Commission (SEC), stirring intrigue and raising eyebrows in crypto enthusiast circles. Paradigm’s Special Counsel Rodrigo Seira referred to the SEC’s action as “wrongful” in a Twitter thread posted on July 11th. Seira took umbrage with the SEC’s case against U.S.-based crypto exchange Bittrex, asserting that the legal action was an inappropriate infiltration into secondary markets by the SEC.
All this ruckus kicked off with Paradigm filing an amicus brief that put the SEC on blast for overstepping its jurisdiction. This was followed by Seira noting that the SEC’s Chair (Gary Gensler) acknowledged crypto exchanges’ lack of regulation, giving rise to the conclusion that the regulator lacked the necessary clout to govern these markets effectively.
Seira went on to claim that the SEC’s authority was insufficient, as crypto-assets do not include “investment contracts”. Thus, crypto-assets don’t fall under the purview of the SEC, and the industry remains in a state of limbo. With Coinbase requesting a rule change from SEC, the SEC still grapples to evolve and respond to industry developments, maintaining a ‘come in and register’ stance, but offering no concrete means to do so.
In April the SEC filed a case against Bittrex. The crypto exchange responded with the surrender of its Florida money transmitter license before filing for bankruptcy by May 8th.
Paradigm’s involvement does not end there. On May 11, this firm threw its weight behind Coinbase, petitioning to file an amicus brief in support of the company. Coinbase accused the SEC of failing to offer clear rules or guidance for digital asset firms in the U.S. Consequently, the unfolding drama presents a gripping case study revealing the strain under which regulatory authorities and a rapidly evolving industry find themselves.
Simultaneously, this scenario underscores the need for a clear, inclusive, and agile regulatory framework that can benefit crypto markets, crypto exchanges, and the digital revolution at large, without stifling innovation or development. This is an unfolding story which could change how regulatory authorities, such as the SEC, might interact with and seek to govern evolving sectors like crypto in the future.
Source: Cointelegraph
