US losing edge in crypto due to SEC’s ‘scorched earth’ tactics, Robinhood exec says

Robinhood’s Chief Legal Officer Daniel Gallagher criticized the US Securities and Exchange Commission’s (SEC) attack to crypto regularisation successful written testimony submitted for a Sept. 18 proceeding earlier the House Financial Services Subcommittee connected Digital Assets.

Gallagher elaborate Robinhood’s efforts to comply with SEC regulations, citing implicit a twelve meetings and calls implicit 18 months. However, contempt these efforts, the institution received a Wells notice from the SEC’s Enforcement Division successful May.

He pointed retired that the SEC unit were often unresponsive to Robinhood’s requests for guidance connected moving guardant with its registration proposal.

‘Scorched world approach’

Gallagher labeled the SEC’s strategy a “scorched earth” attack that negatively impacts US crypto investors.

He argued that the deficiency of wide guidance connected which integer plus transactions suffice arsenic concern contracts remains a cardinal issue. This uncertainty has led to multiple lawsuits by the SEC against crypto firms, further hampering manufacture progress.

Gallagher added that “regulation by enforcement” harms American consumers seeking greater entree to integer assets. It besides stifles innovation successful blockchain and erodes the US’s competitory borderline successful planetary integer plus markets.

He contrasted the US with Europe, wherever the Markets successful Crypto-Assets (MiCA) regulation provides a unified model for crypto markets, enabling innovation to flourish overseas.

Next steps for SEC

Gallagher suggested that the SEC could usage its existing authorization nether Section 36 of the Securities Exchange Act of 1934 to make a model for registering and overseeing platforms that facilitate trading successful integer assets deemed concern contracts.

He noted this rulemaking could code cardinal issues specified arsenic registration, user protections, custody requirements, and transaction reporting. These measures, helium added, could person mitigated immoderate of the harm caused by the FTX illness successful 2022.

Congress roles

Gallagher emphasized the request for Congress to found a clear, broad regulatory model for integer assets.

He argued that lone Congress tin supply the semipermanent regulatory clarity needed to guarantee token issuers, exchanges, and different marketplace participants tin run without fearfulness of changeless enforcement actions.

Such clarity, according to Gallagher, is important for maintaining the US’s enactment successful liable blockchain innovation and well-regulated integer plus markets.

The station US losing borderline successful crypto owed to SEC’s ‘scorched earth’ tactics, Robinhood exec says appeared archetypal connected CryptoSlate.