The Blockchain Association has asserted that crypto regulation should be determined by Congress, rather than the Securities and Exchange Commission (SEC)
The group's policy director expressed scepticism about the ability of a split Congress to enact crypto legislation but noted that this did not, in the interim, grant regulators unrestricted power
Of a split Congress to adopt crypto legislation but noted that this did not, in the interim, grant regulators unrestricted power.
According to Jake Chervinsky, Chief Policy Officer of the Blockchain Association, US financial regulators are limited by legal reality and, ultimately, it is Congress who will decide the future of cryptocurrency regulations. These remarks were made in a detailed Twitter thread posted on February 14th, in which the policy expert stated that neither the Securities and Exchange Commission (SEC) nor the Commodity Futures Trading Commission (CFTC) has the power to regulate cryptocurrencies in their entirety.
Chervinsky expressed that agreement on crypto legislation appears to be improbable due to the significant difference of opinion between House Republicans and Senate Democrats. He suggested that the SEC and CFTC have gone beyond their jurisdiction in an effort to take action without the involvement of Congress.
Chervinsky suggested that industry participants keep their composure in light of the SEC’s recent actions, citing their enforcement of staking services as an example.
On February 9, the U.S. Securities and Exchange Commission (SEC) reached a settlement with the crypto exchange Kraken which barred the exchange from offering staking services to U.S. customers. SEC Commissioner Hester Peirce strongly opposed the settlement in a dissenting statement, claiming that regulating an emerging industry through enforcement "is not an efficient or fair way of regulating.
"Michael Chervinsky, a crypto lawyer and advisor, noted that litigation is one way the crypto industry can push for good policy, adding that the judiciary has played an important role in dictating policy which has been "ignored."
Coinbase is also subject to an investigation conducted by the U.S. Securities and Exchange Commission (SEC), similar to the one which led to Kraken's settlement. In response, Coinbase's CEO and co-founder, Brian Armstrong, has expressed a more firm opinion, asserting that the elimination of crypto staking would be detrimental to the U.S. On February 12th, Armstrong tweeted that Coinbase's staking services are not considered securities and he would "gladly defend this in court if needed."
Judicial rulings in influential cases set legal precedents. If a similar case is brought to court, and a judge determines that Coinbase's staking services do not constitute securities, other crypto firms in a comparable situation could leverage the precedent in their defense.