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SEC’s aggressive enforcement, Jay Clayton’s chairmanship slowing down cryptocurrency market

Aakash Athawasya

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The role of regulations for cryptocurrency adoption is pivotal as policies decide the level of exposure the cryptocurrency space can get in front of the general population. The United States’ Securities and Exchange Commission has been one of the most active regulators in this regard, with many of its members gaining an interest in the cryptospace over the past few months.

John Reed Stark, former Chief of the SEC’s Office of Internet Enforcement, recently wrote a blog analyzing the decisions made by the SEC in October and what it reflects about its understanding of the space. The three key decisions made by the SEC included,

  1. The restraining order against Telegram’s $1.7 billion token offerings: Telegram raised $1.7 billion through an ICO and was all set to launch its GRAM token to the public by the end of this year. However, since they did not register their ICO with the SEC, the regulatory body has obtained an emergency restraining order and has prevented them from going ahead.
  2. Rejection of Bitwise ETF Application: SEC has rejected numerous Bitcoin ETF until now and the last one was that of Bitwise. Unlike other rejections however, the SEC responded with detailed reasons as to why they didn’t approve the application. This was a clear reflection of how the SEC’s understanding of the cryptospace has matured over the years. In fact, in a statement, Bitwise Asset Management itself hailed the effort and reasoning given by the SEC when rejecting its proposal.
  3. Joint Statement by the chief of FinCen, CFTC and SEC: The head of all three major regulatory bodies released a joint statement warning digital asset service providers to adhere by the rules and regulations set by agencies.

According to Stark, while the SEC has taken great steps towards understanding the mechanics and economics of the cryptocurrency market, while also “turning out a number of thoughtful, forward-thinking and comprehensive regulatory pronouncements,” its Chairman Jay Clayton has concurrently launched his own anti-crypto crusade. However, Stark conceded that Clayton has been dogmatic and commonsensical in his approach towards cryptos.

John Reed Stark concluded his blogpost by stating,

“My take is that so long as Jay Clayton chairs the SEC, the cryptocurrency market will thankfully remain stuck and temporized by aggressive SEC enforcement.”

SEC has come a long way from its early days when it was often criticized for its passive stance towards the cryptospace, something which led to several crypto-offering businesses shifting their bases to outside the USA. And while the SEC has taken a proactive stance in recent months, many industry analysts argue that it still has a long way to go.

Aakash is a full-time cryptocurrency journalist at AMBCrypto covering primarily the US market. A graduate in Finance and Economics, his writing is centered around regulation and institutional investment within the cryptocurrency space. He is also an aspiring triathlete.