Backpedaling, Confusion, and the Future of Digital Assets

Drama is never something foreign to the cryptocurrency world, but the latest plot twists in the ongoing battle between the SEC and the industry have me shaking my head. It seems the one regulatory body that is supposed to lend clarity has instead sowed more confusion. The recent admission by the SEC that perhaps it may have caused some misunderstanding as to the nature of crypto assets was both frustrating and revealing.
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Well, let us break it down

Over the years, the SEC (Securities and Exchange Commission) has been using terms like "crypto asset securities" as if they were well-settled features of the landscape. They have used such amorphous language in their jihad against most things crypto, including the current high-profile battle they've been waging with Binance. Now, they are backpedaling faster than a cat who's stepped on a hot stove.

In a footnote, yep, a footnote of all places, in its amended filing against Binance, the SEC basically said, "Oops, our bad. We didn't mean to imply that crypto assets themselves are securities. We were talking about the investment contracts around them. Sorry for any confusion!"

How does that sound for dandy?

But this is more than a "clarification."; this is a fundamental shift in how the SEC presents its case against crypto companies. And not a moment too soon. The agency's previous stance was about as clear as mud, and it's been causing headaches for everyone in the industry.

I am therefore curious whether this sudden change of heart has anything to do with the pushback they have been getting at their doors. Literally, Ripple's CLO, Stuart Alderoty, gave them a piece of his mind on this very issue, claiming that the SEC invented terms with no legal foundation. It would appear that the constant pressure from the leaders in the industries may finally be forcing the SEC to choose its words more carefully.

But let's not break out the pom-poms and start cheering in front of the SEC quite yet.

This whole thing smells of that "regulation by enforcement" that has been striking terror into the hearts of the crypto industry for years. Instead of clear guidance and rules, the SEC seems content to simply throw lawsuits around and hope something will stick. It's as if they're just making it up as they go along, then changing those rules when it's apparent they've painted themselves into a corner.

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The consequences of such a move are huge.

If crypto assets themselves aren't classed as securities, then what exactly does the SEC regulate?

What does it spell for their open cases with companies such as Binance and Coinbase?

Now, let us return to the big picture: at a point in the crypto industry where everything is moving really fast, new technologies and new use cases are ramping up nonstop, the regulatory framework needs to be able to keep pace. Instead, we have this bizarre dance of advance and retreat on the part of the SEC.

The real gall is the casual manner in which the SEC simply owns up to having blown it. A simple "we regret any confusion" just doesn't cut it when we are talking about hundreds of billions of dollars of industry. This is not a game; actual businesses and investors make decisions based on these regulatory signals.

The case of Binance well illustrates the mess this ambiguity creates.

The SEC has accused them of providing unregistered securities, which would include their BNB token. The thing is, if crypto assets aren't inherently securities, what precisely does one convict Binance of? It's like accusing someone of speeding when you haven't actually set a speed limit.

This entire fiasco has underlined the desperate need for some clear, thought-out regulation of crypto space. What is needed are rules that understand these unique instruments instead of trying to fit this 'square peg' into legal frameworks meant for another financial world.

Posted Using InLeo Alpha