Former heads of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) Timothy Massad and Jay Clayton feel the U.S. is seriously falling behind when it comes to crypto regulation, and they’re calling for legislators to step up and create valid rules once and for all.
Timothy Massad on the Lack of Crypto Regulation
Right now, the U.S. is arguably one of the worst places for crypto activity. This largely has to do with the idea that men like Gary Gensler – the current head of the SEC – are engaging in “regulation through enforcement” tactics, in which crypto companies are targeted and charged with crimes when they don’t partake in activities or ideologies the attacking financial agencies deem fit or correct.
The problem with this, however, is that these same agencies are not working to establish long-term legislation that would make the crypto rules in this country easier to understand or live by. Instead, they are just on the offensive 24 hours a day, and many crypto companies cannot take the pressure anymore.
Right now, for example, Coinbase – which is currently being sued by the SEC for allegedly operating as an illegal exchange broker – has opened a new office in Bermuda, claiming it will not focus on U.S. relations or activities regarding crypto until the regulatory environment becomes clearer and more stable.
Massad is one of the many individuals that isn’t happy about the way things are going in America. In a recent interview, Massad explained:
We strongly support enforcement of the laws, but what we’re saying is we need more than that, and the reason is twofold. One is litigation takes a long time and, quite frankly, the crypto industry may find it’s in their interest to stretch these cases out because they may be hoping for a change in regulatory attitude with the 2024 election. The second reason is it won’t resolve all the issues that we need to get resolved.
Try Putting the Securities Argument Aside
Regarding the ongoing arguments surrounding crypto assets as potential securities, he stated:
We are saying that’s an important question but put that aside for a moment if you will. Let’s not get hung up on that, or rather, let’s have a parallel track which says, regardless of the classification issue, we need standards today… Because when you get into rewriting the securities laws or the derivatives laws, you risk creating, you know, a lot of unintended consequences, a lot of loopholes that you didn’t mean to create. This is a way to get investor protection standards into the industry as [that industry] exists today without having to fundamentally change the securities or the derivatives laws.
Another company being sued by the SEC is Binance, which is alleged to have commingled customer and corporate funds.