Crypto regulation in the US continues to be a hot topic among industry players.
Rodrigo Seira, special counsel at a crypto investment firm Paradigm, has criticized the US Securities and Exchange Commission (SEC) for what he perceives as an unjustified attempt to regulate secondary cryptocurrency markets, targeting crypto exchange Bittrex.
In a series of Tweets on July 10th, Seira shared his reflections on Paradigm's recently filed amicus brief, which claims that the securities regulator overstepped its jurisdictional limits.
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Seira expressed disagreement with the SEC's ongoing case against Bittrex, a US-based cryptocurrency exchange, urging for it to be "dismissed." The man's argument pivots on the grounds that the SEC's claims hinge on irrational use of the Howey test, a standard tool used to determine if an asset qualifies as a security.
In his argument, Seira highlights a critical point made by SEC Chair Gary Gensler, who has acknowledged that there is no regulatory framework for crypto exchanges. Gensler's claim, according to Seira, confirms that the SEC is not sufficiently equipped to oversee secondary markets.
Expanding on his argument in a July 7th blog post, Seira asserted that the SEC's jurisdiction doesn't extend to cryptocurrency assets, given that they do not involve "investment contracts," thus placing them outside of the agency's purview. Seira stated:
Until the SEC engages in the rulemaking Coinbase has requested, the digital-assets industry is stuck in limbo, simultaneously told to ‘come in and register’ yet having no effective means of doing so.
The SEC's legal proceedings against Bittrex started on April 17th. By April 30th, Bittrex voluntarily abandoned its Florida money transmitter license and filed for bankruptcy on May 8th.
Notably, this is not the first time Paradigm has taken a stand in favor of a crypto enterprise facing legal charges from the SEC. On May 11th, Paradigm attempted to file an amicus brief supporting Coinbase, which alleged that the SEC had not offered explicit rules or guidance to digital asset firms operating within the United States.
This ongoing saga underscores the tense dialogue between crypto industry insiders and traditional financial regulators. It underlines the pressing need for clear and well-defined regulations that can provide stability and foster growth in the burgeoning digital asset industry.
