- Industry veterans are now calling on SEC Chair Gary Gensler to step away from crypto enforcement actions.
- There have been allegations of the top cop favoring TradFi players.
The entire digital asset industry feels under intentional attack from the Chairman of the United States Securities and Exchange Commission (SEC) Gary Gensler. Therefore, crypto lawyers and other industry advocates have been mounting pressure on him to recuse himself as an arbiter and judge over digital asset enforcement actions.
Specifically, Jake Chervinsky, a lawyer and Chief Policy Officer at the Blockchain Association clearly stated in an open letter that Gensler has “wrongly prejudged that all digital assets are securities.”
Based on this stance, he noted that Federal law requires that Gensler recuse himself from all enforcement decisions related to digital assets. Also, the lawyer clarified that all enforcement actions meted out by the SEC must be done following the “Wells Process.”
Barr & Young Attorneys described a Well Process as a prelude to a potential lawsuit. SEC commissioners are expected to act as neutral arbiters during this process. Their main responsibility is to weigh the evidence and arguments presented by SEC staff and the target of the enforcement without bias. Based on Chervinsky’s judgement, Gensler is nothing close to being a neutral arbiter when it concerns digital assets.
Instead, all he has done since his appointment as the SEC Chair has been to categorize all cryptocurrencies except Bitcoin (BTC) as securities. While Gensler has constantly maintained his stance on the classification of crypto as securities, Congress has not issued any official statement or regulation confirming this argument. This suggests that the entire securities talk might just be a ploy by the SEC Chair against the nascent industry.
Gensler has repeatedly pointed out that the series of enforcement actions levied on crypto entities were meant to protect investors. However, crypto investors argue that he is protecting someone but that person is not the investors who have recorded a series of losses resulting from SEC lawsuits.
Gensler May Be Working For The interest of TradFi
Some observers are saying that Gensler is intentionally cracking down on crypto firms to pave the way for traditional financial (TradFi) institutions like JPMorgan and BlackRock.
Leading digital assets service providers Binance and Coinbase were recently issued two separate lawsuits by the regulator for listing unregistered securities amongst other charges.
Tokens like BNB (BNB), Binance USD stablecoin (BUSD), Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos Hub (ATOM), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS,) and Coti (COTI) were regarded as securities. The enforcement action caused the price of many of these coins to lose value and in turn, caused investors to forfeit several millions.
It was barely a week after these filings that investment asset management firm BlackRock filed for a spot BTC Exchange Traded Fund (ETF). More asset managers like Invesco, WisdomTree, Valkyrie and Bitwise also applied for the same offering. No approval has been issued by the SEC to any of these firms to list a spot BTC ETF, however, it seems like institutional investors have suddenly become interested in the crypto space.
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