According to Y Combinator co-founder Paul Graham, the crypto industry begged for regulation, but was deliberately left dealing with strategic ambiguity by the previous SEC administration.
“I disagree with these people, but I have to point out that they wanted crypto regulated, not deregulated,” Graham said.
Graham has described the approach of former SEC Chair Gary Gensler as “stupid,” noting that the agency had deliberately refused to clarify the legal status of cryptocurrencies.
Legitimate companies that wanted to follow the rules (like Coinbase) were stonewalled or sued. This forced some of them to move offshore or stifle features.
The SEC was suing legitimate exchanges, but actual frauds (like FTX in the past, or the current AI scammers) thrived because they never cared about compliance in the first place.
Graham previously insisted that the industry’s anger was rational.
In his earlier social media posts, described the administration’s handling of crypto as “appallingly irresponsible” and an “attack.”
Atkins’s U-turn
In the meantime, Paul Atkins, the new SEC head, has launched “Project Crypto,” which is meant to normalize digital assets. His approach is based on the idea that “most crypto tokens are not securities,” which is a direct reversal of the Gensler doctrine.
The Atkins-led SEC voluntarily dismissed or settled major enforcement actions against Coinbase, Kraken, and Ripple. Atkins argued that litigation was an inefficient way to create law
However, this regulatory U-turn has attracted some pushback from the Democrats.