Recall that over the past few months, the US Securities and Exchange Commission has begun to put a lot of pressure on the crypto industry. We are talking about the agency's sanctions against the crypto exchange Kraken, as well as the BUSD stablecoin issuer Paxos.

And that’s not all: Gary Gensler is already openly classifying almost all altcoins as unregistered digital securities, which threatens numerous lawsuits for cryptostartups. However, as the Ripple case, which was sued by the Commission for an alleged $1.3 billion unregistered offering in December 2020, shows, the regulator cannot prove its own position.

To make matters worse, Ripple CEO Brad Garlinghouse has previously stated that he expects the case to end as early as 2023. And as you can tell from his remarks, Brad himself is clearly looking forward to winning the proceedings.

More importantly, the Commission itself is not fulfilling its own obligations. Still, Gary Gensler has previously actively encouraged cryptocurrencies to register their own tokens. However, according to Garlinghouse, such a mechanism simply does not exist, which means that blockchain companies simply do not stand a chance of avoiding such problems. And according to Brad, such an illogical approach could be considered a direct war by regulators and authorities in general against the decentralised asset industry.

What’s wrong with regulating cryptocurrencies?

During an interview on the Unchained podcast hosted by cryptojournalist Laura Sheen, Emmer made no secret of his distaste for Gensler’s strategy. Here’s one of his quotes.

This guy, in my opinion, is an unscrupulous regulator. He blindly showered the cryptocommunity with enforcement actions, completely overlooking the really important fraudsters.

Indeed, Gensler failed to prevent the collapse of crypto exchange FTX, cryptocurrency broker Voyager, the BlockFi and Celsius trading platforms, as well as many other companies whose collapse resulted in the loss of tens of billions of dollars to investors. Instead, he decided to threaten legal action against Kraken, which provided a steaming platform for locals and essentially allowed them to make a fairly stable income in digital assets. Now you can't do that.

As an example, the congressman mentioned the incident with the largest US crypto-exchange Coinbase. It had earlier received special notice that the Commission was preparing to file a lawsuit against it. The regulator’s main claim is that the staking programme on the Coinbase platform is allegedly an offer of unregistered securities.


The logic behind this is that users of the staking platform are promised a certain amount of income, which allegedly meets the definition of securities. However, in essence, this is just a rule of blockchain and the specifics of cryptocurrency issuance. Well, since the old legal framework does not take into account the distinctive features of cryptocurrency platforms, it is more convenient for the regulator to see unregistered securities in what is happening.


Emmer also cited another egregious fact in the interview: the SEC’s leadership has previously consistently stated that the regulator is supposedly “ready for a dialogue” with the crypto industry. Here’s his rejoinder.

Gary Gensler’s doors may always be open to visitors, but one must enter with extreme caution. Despite several meetings over several months, the SEC, led by Gensler, refuses to provide feedback to cryptocurrency companies. Instead, the regulator is starting to threaten Coinbase with a lawsuit.

According to Cointelegraph’s sources, Gary Gensler took over as chairman of the Commission in April 2021. Since then, he has repeatedly invited major cryptocurrencies to dialogue and clarify the circumstances of how they should be regulated in the context of securities laws. Again, it was clear even then that Gensler does not recognise the vast majority of crypto projects as a new asset class. In his eyes, they are still the same securities, just not properly registered with his agency.

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Why is this approach knowingly a failure? The fact is that securities regulation laws in the US were drafted back in the last century, i.e. decades ago. Yes, they are constantly being amended in small ways, but there is no way these regulations can match crypto as an asset class that has no analog in the history of the world.

In general, the Commission should not “enforce” and impose its requirements on companies in the crypto industry. The following quote from Emmer should be highlighted about this.

This is clearly not the way the government should be serving Americans. There is no clear signal to the crypto community here. Gary Gensler is not a bona fide regulator.

The congressman’s views are hard to disagree with. There is still no consensus on a unified regulatory system for cryptocurrencies in the US, and that could be one of the reasons why the United States is later lagging behind in adopting innovation.


We believe that US regulators' approach to cryptocurrencies really cannot be called right. It uses outdated regulations in which digital assets simply do not fit. Moreover, the US Securities and Exchange Commission does not want to engage with local companies in a good way, so instead of developing adequate rules of operation, the regulator is engaged in lawsuits and fines. Naturally, it cannot go on like this for long, as losses from possible shortfalls in payments to the budget in case companies move to other jurisdictions will clearly exceed the "risks" of interaction with crypto by ordinary citizens.


Look for even more interesting things in our crypto chat of ex-rich people. There we will wait for the onset of the new bullrun.