The United States Securities and Exchange Commission (SEC) approach to crypto regulation enforcement has stalled the advance of Bitcoin (BTC) in the country, according to the CEO of Grayscale Investments.
in a letter Published in The Wall Street Journal on Jan. 23, the head of the cryptocurrency asset management firm, Michael Sonnenshein, said he agreed with a claim that the SEC was “late to the game” regarding the regulation of cryptocurrencies and preventing FTX bankruptcy, adding:
“’Late’ doesn’t capture what happened here. The problem is the one-dimensional approach to regulation through the application of the Securities and Exchange Commission.
Grayscale is currently suing the SEC for denying the conversion of its Bitcoin trust to a spot-based exchange-traded fund (ETF).
He clarified that the SEC “should certainly try to weed out bad actors” but should not hinder “efforts to develop adequate regulation.”
Do our part to re-instill confidence in #bitcoin Y #crypto DC @Grayscale @CraigSalm @jenn_rosenthal $GBTC pic.twitter.com/u72RHmGTmJ
—Sunshine (@Sunshine) January 23, 2023
The regulator’s inaction to prevent such bad actors from entering the crypto industry “prevented Bitcoin’s advance into the US regulatory perimeter,” Sonnenshein wrote.
This has forced US investors to use crypto companies abroad “with less protection and supervision,” he said.
“We are seeing the consequences of the SEC’s priorities in real time, at the expense of US investors.”
Cointelegraph has reached out to the Securities and Exchange Commission for comment.
Sonnenshein’s opinion piece comes as Grayscale is suing the SEC for having “arbitrarily denied” Grayscale’s plans to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF.
The SEC argued that Grayscale’s proposal did not sufficiently protect against fraud and manipulation. Grayscale responded by saying that the SEC was arbitrarily treating spot-traded products differently from futures-traded products.
Grayscale is owned by cryptocurrency conglomerate Digital Currency Group (DCG), which is currently experiencing financial difficulties.
DCG also owns Genesis Trading, which was charged by the SEC on January 12 for allegedly selling unregistered securities.
Related: SEC Leaked Personal Information Of Crypto Miners During Investigation: Report
Over the weekend, John Reed Stark, a crypto skeptic and former head of the SEC, criticized the term “regulation by application,” labeling it a “Big Crypto Fake Catchphrase.”
In a January 22 post on Linkedin, he called the term a “misguided and misguided effort designed to take advantage of sympathetic anti-regulatory and libertarian mores,” calling it “utterly absurd.”
He argued that “SEC litigation and enforcement is really how securities regulation works.”
