According to a senior White House official, President Joe Biden’s administration is preparing for a tougher stance on the cryptocurrency industry in general and the “safe harbour” proposal in particular, while the SEC is divided along party lines on crypto industry regulation in general and the “safe harbour” proposal in particular.
Moreover, despite the fact that two key Commissioners are well-versed in the industry, a lawyer contends that the SEC’s actions are generally detrimental.
As a result of the newest crypto-related remarks by SEC Commissioners Caroline Crenshaw and Hester Peirce, attorney Gabriel Shapiro stated that, regardless of where the two commissioners fall in terms of crypto-related issues, their separate positions are “very well educated.”
Having said that, whereas Crenshaw believes that existing laws are sufficient for dealing with the human trust and the danger of exploitation aspects of the sector, Peirce believes that new laws are required to address the risks associated with autonomous technology creation.
In addition, well-researched perspectives can both be correct from a specific point of view, according to Shapiro. The SEC, on the other hand, is taking a different and potentially detrimental strategy, according to him:
Commissioner Crenshaw stated in her remarks on October 12 that the technology that supports cryptocurrency – which she described as “a small but rising piece of the economy” – as well as the potential of the cryptocurrency are both encouraging. However, as was feared, there was a ‘but’ attached to this.
The registration process for digital assets projects appears to have been completed by only a handful, as it turns out. According to the Democratic Party member, “many operate as though they are not subject to regulatory supervision.”
The’safe harbour’ plan, which attempts to allow crypto firms to distribute tokens through initial coin offerings (ICOs) while remaining in conformity with the regulator’s rules, is one of the measures that have been brought forward and that Crenshaw has spoken out against. Commissioner Hester Peirce, a member of the Republican Party, has expressed support for this plan.
According to Crenshaw, “Had a safe harbour been in place during the Initial Coin Offering (ICO) or initial coin offerings (ICOs) craze of 2017 and 2018, I believe the results would have been considerably worse for investors and the markets.”
Her stance on cryptocurrency comes at a time when the SEC’s Chairman, Gary Gensler, is continuing to press for greater regulation in the industry as a whole.
Gensler was appointed to this job in April, while Crenshaw was appointed to the role in August of last year.
Crenshaw said that,
“I do not think that a safe harbor that permits unlimited capital raising with only limited disclosures, and no registration requirement, is in the best interest of investors. Nor will it be effective at preventing a re-run of the excesses and failures of the recent past. [….] Instead of a harbor, my hope is that we can build a bridge.”
Crenshaw’s words prompted Peirce to respond on Twitter, saying, “If government wishes to bring law to cryptography, it should act in accordance with the law.”
Peirce responded to Gensler’s description of the crypto business as the “Wild West” with her own remarks, which were published on October 8 and offered a different perspective on the subject. She compared the crypto frontier to the Crazy West in that it appears “quite wild” at first glance – but, as in the previous West, she added, “there is order and discipline in all of that rough and tumble.” Because cryptography is based on code, the code itself serves as a “code of conduct” for participants.”
“The safe harbor I proposed for token distribution events acknowledges there is uncertainty about when cryptoasset offerings implicate the securities laws, but the prevailing attitude at the SEC is that there is clarity, so why bother with a safe harbor? The idea that there is clarity as to when cryptoassets are securities must come as a surprise to the lawyers advising crypto projects that have struggled with this issue for years.”
Crenshaw, on the other hand, appears to have the support of the reigning administration. “You’re really seeing the [Joe Biden] administration at the beginning of what we expect to be an ongoing, quite aggressive effort to make sure we understand and address the whole range of risks that we see in the cryptocurrency space,” Peter Harrell, senior director for international economics and competitiveness at the National Security Council, told The Wall Street Journal in an interview.