The Securities and Exchange Commission (SEC), led by Chairman Gary Gensler, has been actively cracking down on cryptocurrency. In recent months, the agency has filed various enforcement actions against major crypto companies that allegedly violated security laws.
However, critics argue that the SEC has merely adopted a regulation-by-enforcement approach without providing proper rules that cater to the unique features of crypto assets. This has caused much confusion around the definition of a security and whether it can be applied to diverse assets like cryptocurrencies.
Despite pressure in a congressional hearing last week, Gensler seems unwilling to take responsibility and engage in constructive dialogue with the industry.
Many crypto companies targeted by the SEC face a difficult choice – fight an expensive legal battle with the regulator or shut down operations in the US and move overseas. Most companies may opt for the latter to save millions of dollars in legal expenses.
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