The debate over regulatory clarity on digital assets and the role of the SEC keeps heating up.
Earlier this week, SEC Chair Gary Gensler took to Twitter to engage with the public on that matter, but the feedback may have not been what he expected.
“If someone asks a lawyer, accountant, or adviser if something is over the line, maybe it’s time to step back from the line. Going right up to the edge of a rule or searching for some ambiguity in the text or a footnote may not be consistent w/ the law & its purpose”, he wrote.
“The spirit of the law is about protecting investors. Our rigorous enforcement regime is about following the facts and the law, wherever they may lead, on behalf of investors and working families”, the SEC Chair continued. “This includes deceptive conduct by private funds, offering or accounting frauds, insider trading, market manipulation, failures to act in retail customers’ best interests, reporting violations, best execution and fiduciary violations, or any other form of misconduct.”
The Securities and Exchange Commission has been under fire for providing clarity through enforcement instead of setting up a clear framework. Critics include two of the five SEC Commissioners, Hester Peirce and Elad Roisman.
One of the most popular responses to Mr. Gensler’s tweet was Mark Cuban, the billionaire investor who has joined the crypto bandwagon and has influence over the institutional space.
“How about making the lines bright and clear so people know what the rules are? The problem isn’t that people are looking for grey areas, it’s that there rarely are defined rules. Regulation through litigation traps all the people who can’t afford a lawyer, accountant or advisor”.
A new regulatory framework may be around the corner as it was recently proposed in Congress. A law expert has already come forward stating XRP wouldn’t be subject to the SEC under the pending bill.
This week, CFTC Commissioner Dawn Stump explained the “commodity or security” question is a fallacy.
Most recently, the SEC’s suspicious handling of Ripple and XRP has triggered an investigation into a potential conflict of interest.
In the meantime, the SEC v. Ripple lawsuit saw the defendant exposing the SEC’s contradictions using Hinman’s testimony, but fact discovery may ultimately be extended again.
Both the SEC and Ripple have requested the court to move up the deadlines for fact discovery and expert discovery so that the depositions of Brad Garlinghouse and Chris Larsen can take place in mid-September.