The crypto industry is intensifying its battle for regulatory clarity against the US Securities and Exchange Commission (SEC). Notably, the Crypto Council for Innovation (CCI), investment firm Paradigm and the US Chamber of Commerce are backing Coinbase in its legal challenge against the SEC.
The industry flagbearers demand clear regulations for the crypto sector.
Need For Specific Crypto Regulations
Coinbase has been in a protracted dispute with the SEC, seeking specific crypto regulations. Despite its efforts, culminating in a lawsuit, the SEC insists that existing securities laws are adequate.
This stance has led to legal conflicts with major crypto firms. It has also created regulatory uncertainty, pushing companies to consider relocating to more crypto-friendly regions.
“Industry participants seeking regulatory clarity are fleeing abroad to jurisdictions that offer the regulatory guidance the SEC refuses to provide,” CCI stated in an amicus brief.
Read more: Crypto Regulation: What Are the Benefits and Drawbacks?
Moreover, the CCI criticizes the SEC’s informal and inconsistent regulatory approach. In their view, this lack of formal rulemaking forces industry players to navigate through a maze of informal guidance and conflicting legal precedents.
Similarly, the US Chamber of Commerce argues that the SEC’s reluctance to establish clear rules harms the economy and violates legal principles.
Crypto assets, as Paradigm points out, operate differently from traditional securities. They thrive in decentralized networks, not dependent on centralized issuers. Current disclosure requirements, designed for traditional securities, fail to capture the essence of the crypto industry.
They ignore the significant role of third-party developers, presenting a misleading picture of the industry’s dynamics.
Amid these regulatory challenges, the crypto sector’s political activities are gaining momentum. Notably, Tether significantly increased its lobbying spending. In February, the Winklevoss twins donated $4.9 million to the pro-crypto political action committee Fairshake.
This political engagement aims to shape a regulatory environment that fosters innovation and ensures consumer protection.
Read more: How Does Regulation Impact Crypto Marketing? A Complete Guide
As the 2024 elections approach, the crypto community, including leaders like Ripple CEO Brad Garlinghouse and firms like Coinbase and Kraken, is rallying behind pro-crypto candidates. Their substantial financial support for Fairshake underlines the industry’s commitment to influencing policy in favor of a more crypto-friendly regulatory environment.
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