In a recent speech at the SEC Speaks event, Commissioner Caroline Crenshaw, the US Securities and Exchange Commission's sole Democratic Commissioner, raised concerns about the agency's approach to regulating the cryptocurrency industry under the Trump administration. She criticized what she described as a dangerous dismantling of interconnected rules that have been carefully developed over the years, likening market stability to a Jenga tower that could collapse if certain regulations were removed.

Crenshaw expressed worries about the SEC's use of staff guidance to effectively reverse rules without proper analysis or public comment, particularly in the realm of cryptocurrencies. She highlighted the agency's shift towards what she deemed as "regulation by non-enforcement," where enforcement actions, especially in the crypto markets, have been abandoned. This approach, according to Crenshaw, undermines the SEC's enforcement program and raises concerns about the agency's reputation and credibility in court.

The Commissioner also pointed out the risks associated with the crypto industry, citing the 2022 FTX collapse as an example of a potential large-scale crypto crisis. She emphasized the importance of addressing these risks and complexities through rigorous regulatory scrutiny to prevent future incidents with high stakes as the crypto sector becomes more intertwined with traditional finance.

In contrast to Crenshaw's stance, the SEC's Republican commissioners welcomed the agency's increasing involvement in the crypto sector. SEC Chair Paul Atkins expressed that crypto markets have been stagnant under the SEC's oversight for years and advocated for a more supportive approach towards innovation in the crypto industry.

Commissioner Hester Peirce, who leads the SEC's Crypto Task Force, criticized the agency's current regulatory practices under the Biden administration, calling for necessary corrections. She argued that many crypto assets currently in the market do not fall under securities laws as they are functional assets rather than investment contracts.

Commissioner Mark Uyeda echoed his colleagues' sentiments, emphasizing the importance of providing assurances that regulation by enforcement would not be used as a tool for future policymaking.

The contrasting viewpoints within the SEC reflect the ongoing debate surrounding the regulation of the cryptocurrency industry, with some advocating for a more hands-off approach to foster innovation, while others stress the need for robust regulatory oversight to protect investors and maintain market stability. As the crypto market continues to evolve, finding a balance between innovation and regulation remains a key challenge for regulatory authorities.

Source: https://cointelegraph.com/news/sec-crenshaw-agency-playing-regulatory-jenga-with-crypto?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound