The SEC’s approach to regulating the cryptocurrency market has long been resented by the blockchain and digital asset industry. First and foremost, the reason for this is the regulator’s love of writing large fines to companies retroactively, while preventing them from complying with current regulations.

Still, as Ripple CEO Brad Garlinghouse previously stated, the SEC under Gary Gensler regularly encourages cryptocompanies to register their own tokens. However, there is no mechanism for such registration, meaning the regulator is essentially intentionally causing problems for blockchain organisations without the ability to avoid them.

The situation was so serious that the head of cryptocurrency exchange Binance, among others, reacted to it. According to Changpen Zhao, retroactive enforcement – that is, punishing companies for something they did previously given the lack of adequate regulation – is not normal. Read more about Changpen’s viewpoint in a separate piece.

How cryptocurrencies should be regulated

Recall that last week the Securities and Exchange Commission announced a review of the definition of an exchange that could have a negative impact on the crypto market and decentralized finance. The announcement faced opposition even within the agency, with Commissioner Hester Pearce criticising Gensler’s latest decision, which only leads to a fight against innovation within the US.

Recall that changes to the definition of exchanges could lead to a fight against the decentralised finance industry, which operates without centralised bodies and based on smart contracts. As Gensler said at the time, such platforms allegedly also have to comply with securities laws. Although such a thing is not particularly relevant simply because of the nature of decentralised platforms.

However, the dispute over the definition of an exchange is just one item on the agenda of the Financial Services Committee. Here is a relevant quote regarding the planned event.

These hearings will look at regulatory changes as well as SEC rulemaking and activities since the last hearing on 5 October 2021.


SEC Chairman Gary Gensler has not only managed to do a lot of damage to the digital asset industry in that timeframe, but in theory has even exceeded his own authority. For example, at the beginning of 2023, he called all altcoins securities. By doing so, the regulator hinted that his agency perceives almost all coins and tokens as assets that should be within the purview of the SEC. Accordingly, their developers could in theory face legal action, as is already the case with Ripple. However, Gary shouldn't voice such statements, because his point of view regarding this or that asset is not the law, well, only a court has the authority to make such decisions.


Also on the agenda is a statement from the Commission last March calling for custodians to change the way they report liabilities and assets. According to some lawmakers, this increases the potential losses of clients who are put at risk by having their assets held by a third party.

The bottom line is that a fresh SEC strategy awaits an in-depth review by the government. It is also hoped that officials are aware of the extent of the harm this regulator is causing to the digital asset industry. So the conversation with Gensler should be tough.

The day after, Congress will consider “Understanding Stablecoin’s Role in Payments and the Need for Legislation”. According to Decrypt’s sources, this includes consideration of a 72-page bill “to provide requirements for stablcoin issuers, digital dollar research and other purposes”.

The bill includes extensive definitions, establishes federal and state requirements for the issuance of stablcoins. It also spells out standards for interaction, reporting and enforcement. Overall, the bill calls for a two-year moratorium on the issuance of new Stablecoins until the government completes a study.

Circle co-founder and CEO Jeremy Allaire called the bill “the product of a bipartisan effort” and “the first comprehensive proposed stablocoin law”. Here’s his rejoinder.

This is an important moment for the future of the dollar in the world and the future of digital currencies. It’s time for US leadership, and that means clear regulation and increased opportunities for entrepreneurship and innovation under prudential legislation.

Although the US Securities and Exchange Commission has not been liberal on stablcoin issuers before. Recall that the regulator had previously banned the issuance of BUSD steiblocoin by Paxos. It’s quite possible that the upcoming debate in the government will be the reason for the SEC to change its strategy. However, with Gary Gensler in place, there is not much to expect in terms of cryptocurrency regulation.


It looks like Gary Gensler's position may become more precarious in the near future. Apparently, his constant criticism of cryptocurrencies and regular lawsuits for crypto startups make the US a less attractive jurisdiction for blockchain companies. Well, this, in case the latter move, will directly affect the country's budget revenues and other related parameters. Accordingly, officials will have something to deal with as early as tomorrow.


Stay tuned for more developments in our crypto-chat of ex-rich people. Perhaps we’ll wait for the bullrun to arrive there someday.

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