Stu Alderoty, Ripple Labs’ General Counsel, has reacted to a recent opinion piece written by Gary Gensler (SEC chairman), arguing that regulators’ crypto market shakedowns don’t protect consumers.
Alderoty wrote in an opinion piece published on August 28 on Wall Street Journal (WSJ), titled “The SEC Wants America’s Crypto Cop,” that the SEC “pushing aside its follow regulators” and is instead focusing on crypto regulatory clarity.
He gave the example of BlockFi’s recent “shakedown” by the SEC. This resulted in the company being “up on the Auction Block” and two similar companies being “belly up.”
“Consumers were not protected. They were left holding the bag.”
This article was written in response to Gensler’s Aug. 19 article, “The SEC Treats crypto Like the Rest of Capital Markets”, which was also published by WSJ. It defended the regulator’s crackdown against the crypto industry.
However, Ripple counsel claims that the SEC has not provided enough clarity about crypto regulation and instead calls itself “the cop on duty” for crypto.
He claimed that the chairman is “pushing aside fellow regulators” as well as “front-running” President Biden’s executive order, which asks regulators for collaboration on crypto regulation.
Alderoty refers to the executive order as the “Ensuring Responsible development on Digital Assets” which was signed in Mar. 9. 2022: To ensure that the SEC (and Commodity Future Trading Commission, (CFTC),) collaborate and coordinate on establishing a crypto regulatory framework.
Aldetory however claims that the SEC has not complied with the executive order or provided any “regulatory clarification for crypto” and instead is “protecting its turf to the detriment of over 40 million Americans involved in crypto-economy.”
Gensler stated in his article that U.S. federal security law were created to protect investors. He also argued that there is no reason to treat crypto markets differently than other capital markets simply because they use a different technology.
Related: SEC lists 9 tokens in Insider Trading Case as Securities. CFTC
Many critics disagree with Roslyn Layton, Forbes writer, pointing out in an Aug. 28 article that the SEC’s decision to double its Crypto Assets and Cyber Unit staff and SEC’s “regulation and enforcement” approach are reasons for the contrary.
U.S. Attorney John Deaton claimed that Gensler, the SEC, had intentionally targeted cryptocurrencies earlier in the month. It also said that the U.S. has exceeded their current regulatory capabilities.
“It doesn’t take a constitutional lawyer expert to see that the SEC has limited authority over the crypto market; barring Congress action, the Commodity Futures Trading Commission is the primary regulator of investments not deemed traditional securities.