The ongoing legal battle with Coinbase and the victory against the SEC in the Ripple case further underline the regulatory body’s defiant position.

In a recent interview with Thinking Crypto, Katherine Kirkpatrick, Chief Legal Officer at Cboe Digital, delved into the current state of regulatory affairs within the US Securities and Exchange Commission (SEC) and its profound impact on the crypto market. cryptocurrencies.

SEC Concerns

The SEC has raised concerns about lack of disclosure and widespread non-compliance with existing securities laws by participants in the crypto asset market. These challenges reflect the constant struggle to regulate the ever-evolving and often complex world of cryptocurrencies.

The existing legal framework has gaps in the regulation of cryptographic assets that are not considered securities, as well as certain stablecoins. This has led to calls for comprehensive legislation and greater coordination between various regulatory agencies.

There is limited and developing case law regarding the application of securities laws to crypto assets. This legal ambiguity makes it difficult for the SEC to effectively enforce regulations in the cryptocurrency space.

The SEC has been trying to hire specialists in the cryptocurrency field, particularly in its examinations, trading and markets, and compliance divisions. However, the agency faces challenges in finding qualified candidates due to a small candidate pool and strong competition with the private sector looking for cryptocurrency specialists. Many potential candidates may own crypto assets and are unwilling to part with them, disqualifying them from working at the SEC due to ethical considerations.

SEC Regulatory Challenges

Kirkpatrick began the discussion by expressing concern about the prevailing regulatory environment. He highlighted recent setbacks the SEC has faced, particularly the case involving Grayscale. In this case, the judges criticized the SEC for what they perceived as arbitrary and capricious actions in denying the Grayscale Bitcoin Spot ETF.

The conversation turned to possible repercussions for the SEC’s credibility. Host Tony Edward emphasized that continued losses in high-profile cases could prompt Congress to take faster action. However, Kirkpatrick tempered expectations by noting that regulatory action does not always align with legislative progress. Despite recent challenges from the SEC, she anticipated that comprehensive legislation on crypto market structure is still some time away.

Kirkpatrick defended the SEC’s approach and stressed that not all battles are lost. She cited the recent “library victory” as a significant success and suggested that some of the SEC’s lawsuits are strategically designed to cover various grounds in different courts with different judges. She stressed that the outcome of these legal battles remains uncertain.

The Need to Improve Communication

A key aspect that Kirkpatrick emphasized was the need to improve communication between the crypto industry and the SEC. She expressed concern about missed opportunities as a result of the lack of proactive and productive dialogue. This lack of communication has been detrimental to both the industry and the regulator.

The discussion also addressed the politicization of crypto issues. Kirkpatrick expressed concern about a divisive mentality emerging between the crypto industry and the SEC. She highlighted the importance of fostering a more constructive and collaborative relationship.

Hope for Positive Advances

Kirkpatrick acknowledged the uncertainty surrounding the future of cryptocurrency regulation, but remained hopeful for positive developments in 2024. He urged more constructive and open dialogue between the cryptocurrency industry and regulators, with the goal of last resort to achieving a balanced and well-informed regulatory framework. The future of cryptocurrency regulation remains a dynamic and evolving landscape, and stakeholders are eagerly watching developments in the coming years.

By Leonardo Perez


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