New headlines show the U.S. Securities and Exchange Commission is gearing up to present more enforcement action against crypto companies and money transmitters that are using digital assets.
Jack Schickler at Coindesk reports the SEC has hired 20 more people to police crypto, and implicitly, related assets like NFTs, bringing the full staff involved in this effort to around 50 people.
With 80 enforcement actions since 2017, the SEC has been active in both preemptively ruling on certain crypto lending products, and in taking an active stance in litigating certain tokens and coins that the agency and its head view as unregistered securities.
However, crypto fans are calling foul, as Gary Gensler, it seems, has yet to fully explain his reasoning on crypto assets including stablecoins.
Although Gensler has said that stablecoins “may as well be securities,” he has not reacted directly to legislators concerns that since stablecoins don’t meet the Howey test, they don’t qualify as securities.
In response, Gensler has simply said that some types of securities may fall outside of what the Howey test can measure, without giving additional clarifying information.
This, to critics, seems abundantly vague and unfair.
“Securities and Exchange Commission Chairman Gary Gensler ruffled feathers in the cryptocurrency community when he declined to rule out regulating stablecoins as securities during a hearing before the Senate Banking Committee on Tuesday,” wrote Chris Matthews Sept. 16 of last year. “Republican Sen. Pat Toomey of Pennsylvania asked Gensler whether he believes stablecoins, or cryptocurrencies designed to maintain their value relative to the U.S. dollar are securities under the Supreme Court’s definition of an investment contract called the Howey Test. Gensler declined to give a specific answer.”
There are also echoes of the case against Ripple where SEC has been challenging the XRP token in court for quite a while now. When it came out that former SEC Chairman Jay Clayton allegedly works at a consulting firm promoting Bitcoin and Ethereum but not other rival cryptocurrencies, watchdogs started to wonder whether the SEC is actually administrating its responsibilities fairly.
Keep an eye on SEC versus XRP, where Ripple has won some significant victories in New York courts – and keep an eye on the SEC as it seems to be poised to conduct more wide-ranging enforcement activities.
