The Securities and Exchange Commission’s settlement with ShapeShift “adds to ambiguity” in the crypto industry, the agency’s Republican commissioners said in a rebuke of the agency’s latest enforcement action.
“The Commission’s enforcement action against ShapeShift is the latest episode in the serial drama of the Commission’s ill-conceived crypto policy,” SEC Commissioners Hester Peirce and Mark Uyeda said in a statement. statement Wednesday.
The SEC announced Tuesday that it has filed a cease and desist order against a crypto company. Metamorphose for allegedly acting as an unregistered securities dealer. The agency invoked the Howey test, which is based on a 1946 U.S. Supreme Court case frequently cited by the SEC to determine whether an asset qualifies as a security.
“This enforcement action highlights the harmful consequences of the Commission’s approach to crypto regulation and adds to the ambiguity hovering over the crypto world,” the commissioners said. “It is entirely unclear how ShapeShift was able to discern that the Commission would view crypto assets in general – and any crypto asset in particular – as security in the form of an investment contract.”
The SEC’s approach
Both Republican commissioners criticized the SEC’s enforcement approach to crypto. Over the past few years, the SEC has actively pursued lawsuits against crypto companies, including notable cases last year against crypto exchanges Binance and Coinbase.
SEC Chairman Gary Gensler has repeatedly said crypto platforms must register with the agency and said many cryptocurrencies are securities. The crypto industry, meanwhile, has argued that they struggle to comply and remain competitive without a clear regulatory pathway in the United States
Peirce and Uyeda called the SEC’s “just go in and register” approach “grossly unsatisfactory.”
“The fiction that this was done is undermined by the Commission’s failure to specify which specific assets in the case before us are securities,” they said. “The standards are so opaque and arbitrary that the Commission itself is unwilling to stick to its own analysis. If a case-by-case determination is possible, we respectfully ask the Commission to show its work. “
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