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Op-Ed: Why the SEC Should Stay Away from Crypto (Part I)

It is time for the US to enact sensible, progressive and specific digital asset regulation.

The Securities and Exchange Commission’s recent charges against Coinbase and Binance have brought the debate over digital asset classification to a boiling point, and I believe it demonstrates that the organization is unable to competently regulate digital assets. Not equipped for

Included in the suit is a list of more than 15 digital assets the SEC claims pass the Howey test and are thus securities. To succeed in the suit, SEC Chairman Gary Gensler told cnbc,

“All we have to do is show that one of the (tokens listed by the exchange) is a security and they should be properly registered.”

However, when reviewing the purported securities listed by the exchanges, there is no mention of the black swan that was the Terra-Luna collapse (Binance is left for passing reference in the suit.) Binance currently lists Luna as well as Classic Tokens. lists. LUNC, while Coinbase enlisted Wrapped LUNA (wLUNA) and it is still available through Coinbase Wallet. The failure of Terra Luna wiped billions of dollars off the crypto market cap and caused individual investors to lose huge amounts of money.

The SEC also calls out token trading on FTX as part of its argument that Coinbase is wrong. In trial, the listing of SOL on FTX.US is presented as part of the evidence claiming that Solana is a security. Binance Suite also includes an almost identical section.

At this point, it is well known that FTX and its officials had a very well known presence on Capitol Hill and that the SBF and its affiliates established personal or working relationships with many members of the US government, including Gensler. American customers lost huge sums of money when that exchange failed, leaving some members of the government with an embarrassing track record of reaching out to alleged fraudsters and the uncomfortable reality of stripping themselves of their substantial campaign donations.

The US Has Failed at Crypto Regulation

Coinbase has been publicly requesting guidance on digital asset regulation for years. “The SEC is where we have really struggled over the last few years,” Coinbase CEO Brian Armstrong said in a Twitter space earlier this year.

Armstrong explained that until the SEC specifically requested a visit to Coinbase last year, Coinbase had attempted to contact the SEC to discuss the regulatory landscape. Coinbase had “30 meetings over the past nine months” with the SEC, which was supposed to culminate in a meeting where a response would be given.

However, Armstrong alleged that the SEC canceled the meeting the day before it was to take place and sent a Wells notice to Coinbase the following week. Nine weeks later, it sued the exchange for violating several securities laws.

Digital Assets Mentioned in Congressional Records

while A is done significant increase in Congressional activity on digital assets over the years, with over 1,065 mentions of the term in the record. Still, real progress on digital asset regulation has been extremely slow.

The digital asset was first mentioned in the Senate the hearing from 2000 in “Utah’s Digital Economy and Future: Peer-to-Peer and Other Emerging Technologies”, in which they were compared to “databases”.

digital assets were also mentioned In a 2001 congressional hearing by the Energy and Commerce Subcommittee on Commerce, Trade, and Consumer Protection. Reciprocal, Inc. President and CEO John Schwarz argued that “securing digital assets and preventing unwanted digital intrusion is tantamount to protecting personal and potentially national integrity.”

While Schwarz was referring to digital files such as MP3 audio and MP4 video, this is the first official mention of the term now making headlines.

The term was mentioned each year until 2019, when the number of digital asset mentions increased to 21, including proposed bills. Managed Stable Coins Are Securities Act And this Keep Big Tech out of Finance Act.

By 2022, there were 598 mentions of the term “digital asset”, including 22 bills, 14 congressional hearings, and more than 500 mentions in the congressional calendar. This year, 2023, has had only 68 mentions so far, the biggest reason for the decline in Congress’s calendar collection, falling from 501 to just eight mentions.

Trends in Digital Asset Usage

I referenced “digital assets” on GOVinfo.gov’s Congressional and Federal Databases for search volume of the same term on Google from 2005 to the present.

The generalized chart below shows interest via Google searches from around 2017, while it took until 2020 for the US government to increase usage of the word on record.

In a chart, the data is scaled to a common reference point, making it easier to compare and analyze different data sets. In particular, mentions on official public records for “digital assets” dropped drastically when Google search traffic was above 60%.

It looks like Google search interest has formed a double top with a peak in 2021 and a lower high in early 2023. ,

Furthermore, interest from Congress has simply fallen off a cliff, falling from 598 in 2022 to just 58 six months into 2023.

Why?

Have conversations on digital assets moved from official public records to back channels and social media? Was the 2022 boom related to the urgent need to define digital assets?

If this were the case, why are companies (publicly) begging for guidance on digital asset regulation being sued by the SEC?

In part two of this three-part feature, we’ll explore the implications of the SEC’s actions and explore alternative approaches to crypto regulation that could benefit the industry and its investors.

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