The Chamber of Commerce in Washington, DC has criticized the Securities and Exchange Commission (SEC) over a lack of clarity on which digital assets are considered securities under federal law. This comes as Coinbase and Ripple threaten to leave the U.S. due to a “lone crusade” from SEC Chair Gary Gensler.
The Digital Asset Industry Demands Regulatory Clarity
The digital asset industry is worth $1 trillion and is only getting larger each year as more cracks start to appear in the traditional financial system.
The SEC has ordered companies associated with the industry, such as the exchange Coinbase and blockchain service Ripple, to “come in and register.”
However, the federal commission is being sued by Coinbase for lack of clarity on how exactly to do just that.
Coinbase is arguing that the SEC has not actually offered any regulatory framework for the digital asset space to operate under, nor any instructions on exactly how to register, nor even who needs to.
The lawsuit simply asks the SEC to clarify which digital assets are considered securities, as those would come under the jurisdiction of the Securities and Exchange Commission.
The Court of Appeals has since allowed other companies to offer their support to Coinbase, and the industry is uniting against the “lone crusade” being fought by SEC Chair Gary Gensler.
On top of this, and in further evidence of Gensler’s isolation in his war against the digital asset community, the U.S. Chamber of Commerce has also slammed the Commission for its ambiguity.
The Chamber has argued that the obscurity of the SEC’s position, both on which digital assets they are concerned with and how companies are being regulated, is only doing harm to the industry.
The SEC Refuses To Explain Its Position
Coinbase initially asked for clarity in July 2022 but was completely ignored by the SEC.
This prompted the lawsuit, which simply seeks to force an answer, whatever that answer may be.
In the past, Gary Gensler has implied that all digital assets other than bitcoin are securities — Bitcoin is considered a commodity — which would place them under the remit of the SEC.
However, this has never been formally defined, and the industry is unsure how to move forward, stifling progress.
Another fear from the industry is that they will end up sued by the SEC for breaking rules they never knew applied to them.
The Commission has taken legal action against Coinbase, Kraken, Paxos, and Ripple, accusing them of violating securities regulations.
This comes despite there being no clear regulations to begin with, nor any definitive statement of who they apply to.
Could The Industry Leave The United States?
Despite what some might think, companies crave regulation — or at least clarity.
A clear rulebook allows them to plan ahead and make moves that they know won’t result in punishment from the government. The SEC’s refusal to make that rulebook clear has made the U.S. a far less attractive place to do business, and some companies are threatening to leave.
Brad Garlinghouse, CEO of Ripple, has mentioned the U.K., Switzerland, Singapore, Japan, and the U.A.E. as potential destinations.
Coinbase’s CEO, Brian Armstrong, has also stated that the U.K. has been “very welcoming,” making the British market an attractive proposition.
While it’s generally deemed unlikely that these companies will leave the U.S. entirely, it has been suggested that expansions abroad will take a higher priority than they otherwise would have unless regulation is made more transparent in the United States.
The U.S. market is huge, and currently, 50 million Americans own digital currencies.
Threats to leave can probably be considered sabre-rattling for now, but they could become more serious if the situation isn’t sorted out soon.
Is Bitcoin Safe?
The one digital asset that seems safe from Gensler’s crusade is bitcoin, which the chair himself recently confirmed is not a security.
While the war rages on in the altcoin communities, the world’s largest first and largest digital currency sits safely on its throne.
Bitcoin, unlike other digital assets, is not under the control of a small development team. Nor was there ever an ICO (initial coin offering) to launch the decentralized currency.
For these reasons, those who buy bitcoin are not expecting profits based on the actions of others. This, among other signifiers, makes bitcoin a commodity rather than a security, making it safe from Gensler’s grasp.
This should be a comfort to bitcoin hodlers, as well as those looking to invest in bitcoin now or in the future.
Bitcoin was already looking like a lifeboat in a storm, but as the traditional finance world continues to unravel, it’s looking more like a spaceship with an asteroid approaching.
As the fiat world continues its collapse, with the U.S. currently in the middle of three separate crises (the banking crisis, the debt ceiling crisis, and this regulatory crisis), bitcoin is looking more attractive every day.
