The U.S. Securities and Exchange Commissioner (SEC) Chair, Gary Gensler let slip his mixed feelings regarding a recent court ruling in the Ripple case. For him, finding that the institutional sale of tokens was in breach of federal securities laws was a bitter-sweet victory.
He lauded the court’s emphasis on safeguarding institutional investors, voicing his frustration, however, over the court’s stance on retail investors. Despite the court’s decision, the SEC’s exploration of the case’s intricacies continues.
This all centres on Ripple’s successful counter against the SEC last week, proving that the token sales on exchanges and programmatic sales are not classified as securities sales. It is this very outcome that the SEC finds hard to swallow, compromising their notion that speculative investors should expect profits to be derived from the entrepreneurial or managerial efforts of others.
In an attempt to avoid weighing in prematurely on matters in the SEC’s court, Gensler was unusually tight-lipped about the things the SEC would need to boost its confidence in spot-bitcoin ETFs. This reticence, wisely fueled by ongoing litigation, did not, however, deter him from answering why the SEC prefered pursuing active enforcement over proactive rulemaking, as done by the European Union’s MiCa.
Responding to these criticisms, Gensler defended the SEC’s practices saying they have indeed engaged in rulemaking. He cited “notice and comment rulemaking” and the issuing of “special purpose broker-dealer” licenses as examples of the regulatory body’s proactive measures.
In short, it seems the SEC is stuck in a quandary – elated by Ripple’s court-room defeat, yet grappling with the implications this case has for retail investors. To the outside observer, this tension cultivates an air of unpredictability that might discourage new entrants into the market. However, as Gary Gensler’s rebuttal shows, the SEC’s approach is not entirely driven by active enforcement, but also includes rulemaking to better regulate the cryptocurrency landscape.
Source: Coindesk
