The chairman of the US Securities Exchange Commission (SEC), Gary Gensler, is facing opposition and criticism for his approach to cryptocurrency regulation. Judges in the Ripple and Coinbase lawsuits have rebuked the SEC for its lack of consistency in applying laws.
Gensler Could Lose SEC War on Crypto
A recent op-ed argues that Gensler’s efforts to regulate crypto and other industries are driven by ideology rather than practicality. Congressman Ritchie Torres, a vocal critic of Gensler, believes that he is acting more like a politician than a regulator.
Even within his own political party, Gensler has faced resistance to his crypto crackdowns. The US Supreme Court has also shown hostility towards agencies that regulate industries at their discretion.
Coinbase has invoked the major questions doctrine in its defense against SEC charges, arguing that agencies should not be allowed to expand their jurisdiction on important economic or political matters.
Ripple Labs has successfully contested SEC accusations regarding the sale of XRP to retail buyers as unregistered securities. If the court rules that sales to institutional investors were also unregistered securities, Ripple could present evidence that a former SEC official stated Bitcoin (BTC) and Ethereum were not securities.
If the SEC loses the Coinbase and Ripple cases, it may be limited in exercising rights not granted by Congress. While Gensler has three more years in his role, the courts could undermine his crypto ambitions before then.
Lawyers Tear Into SEC Inconsistencies
The court criticized the SEC’s rejection of Grayscale’s application for a Bitcoin trust exchange-traded fund as “arbitrary and capricious.” Ripple lawyer Stuart Alderoty publicly questioned why the SEC should not face disciplinary action for making false and misleading representations in another case.
Pro-crypto lawyer John Deaton, who bought XRP after the SEC sued Ripple, has highlighted the SEC’s inconsistent application of securities laws. He also offered his interpretation of an investment contract to showcase these inconsistencies.
Hot Take: Potential Impact on Gary Gensler’s Career
The ongoing Ripple and Coinbase cases could have significant implications for SEC Chair Gary Gensler’s career. The court’s criticism of the SEC’s lack of consistency and arbitrary decisions raises doubts about Gensler’s approach to crypto regulation. If the SEC loses these cases, it may face limitations on its regulatory power. This could tarnish Gensler’s reputation and hinder his crypto ambitions. It remains to be seen how these legal battles will unfold and their ultimate impact on Gensler’s tenure as SEC chairman.
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