Legal Experts Question the SEC's Approach to Cryptocurrency Regulation
Regulating Cryptocurrency Activities
Legal experts have critically assessed the decisions made during the tenure of former SEC Chairman Gary Gensler, arguing that a significant portion of cryptocurrency trading should be exempt from regulatory oversight. They warn that existing regulations have had a negative impact on cryptocurrency developers and trading platforms.
JW Verrett stated, "For the past four years, the SEC has distorted the law against cryptocurrency developers and platforms. This situation must change, and the future regulatory environment should allow for flexibility and collaboration."
Suggestions on the Howey Test
Participants emphasized the need to reevaluate how the SEC applies the 80-year-old Howey Test to the cryptocurrency space. They pointed out that the criteria of the test (investment, joint venture, expectation of profits, and reliance on the efforts of others) often fall short, especially in areas like staking and airdrops.
The Blockchain Association stated, "New interpretations may narrow the existing definitions and applications, thereby negatively impacting the crypto industry."
Reports indicate that the SEC's cryptocurrency working group aims to develop comprehensive regulations for crypto tokens, and this group is taking steps based on feedback from industry representatives. Under Hester Peirce's leadership, the SEC is seeking written proposals from industry professionals.
Additionally, there are initiatives to pause the Coinbase case, end the investigation into the NFT platform OpenSea, grant Binance a 60-day pause, and conclude the investigation into Uniswap. These developments are seen as indicators of a shift in regulatory approach.
Market participants are closely monitoring the situation, especially as the nomination of the SEC Chairman is expected to take some time, and upcoming regulations may take months to clarify.