Despite attempts to police cryptocurrency through enforcement actions, United States financial regulators “are bound by legal reality” and Congress will ultimately decide crypto regulations, the policy expert for the crypto advocacy group Blockchain Association says.
The association’s chief policy officer, Jake Chervinsky, shared his views in an extensive Feb. 14 Twitter thread on the state of crypto policy.
He noted neither the Securities and Exchange Commission nor the Commodity Futures Trading Commission “has the authority to comprehensively regulate crypto.”
Chervinsky believed a deal on crypto legislation seems “unlikely, given the ideological gap between House Republicans and Senate Democrats.” He accused the SEC and CFTC of overstepping their authority in an attempt to “get things done” without Congress.
Chervinsky called for the industry to remain calm following the recent flurry of activity from “crypto’s chief antagonist,” the SEC, and pointed to its crackdown on staking services as an example.
In a Feb. 9 dissenting statement, Peirce argued that regulation by enforcement “is not an efficient or fair way of regulating” an emerging industry.
Chervinsky suggested litigation is one way the crypto industry can push for good policy, noting the judiciary plays an important role in dictating policy that has been “ignored.”
Crypto exchange Coinbase also faces an SEC probe similar to what resulted in Kraken’s settlement.
Coinbase CEO and co-founder Brian Armstrong has taken a more resolute stance, claiming that getting rid of crypto staking would be terrible for the U.S.
Armstrong argued in a Feb. 12 tweet that Coinbase’s staking services are not securities and would “happily defend this in court if needed.”
Judges’ rulings in landmark cases create legal precedents. If such a case were brought to court and a judge decided Coinbase’s staking services did not classify as securities, other crypto companies in a similar position could use the precedent as part of their defense.