SEC pressure on crypto will intensify

The SEC has been making a powerful splash since February by attacking the crypto industry in the US. Meanwhile, the US Congress got involved and wants to prevent the democratic politician Gensler from causing further damage to the industry. However, experts are convinced that the head of the agency is just getting started. Coercive measures by the stock exchange supervisory authority will therefore increase sharply.

Regulatory pressure on crypto will intensify

The new political direction of the SEC, under the leadership of Democratic politician Gary Gensler, has been repeatedly reported in the past. The US Securities and Exchange Commission primarily targets centralized crypto exchanges such as Binance or Kraken.

Since February, the SEC has fined several crypto companies or forced settlements through threats. The US Congress also took notice. The US Finance Committee therefore invited the politician. He should answer questions. However, Gensler’s reactions met with little approval from his Republican competitors.

US Representative and Chairman of the Treasury Committee Patrick McHenry took Gensler down a notch for not wanting to provide an answer to the question of whether Ethereum should be legally treated as a security or as a commodity .

The Finance Committee plans to give the SEC less freedom in the future. Instead, the authority should report directly to Congress on its work at regular intervals. Parliament should be more actively involved in the work of the supervisory authority as a supervisory authority in order to prevent abuse of power, which Gensler is accused of.

However, experts believe that this will not happen in the foreseeable future. Rather, the coercive measures of the SEC will increase, so explain Martin Leinweber from the data aggregator MarktetVector and Victoria Bills from the management consultant Banrion Capital Management in an interview with Blockworks.

According to Leinweber’s observations, the number of attorneys employed by the SEC has increased significantly. Gensler intentionally increased their number in order to be able to effectively enforce coercive measures.

“This strategic shift suggests the regulator will be even stricter going forward.” Says linen weaver. The main aim is to financially exploit crypto companies. That was already successful last year, although the work was still half-hearted at the time.

The SEC took in a whopping $2.6 billion in fines from crypto companies in 2022, according to data from Cornerstone .

“Under Gensler’s leadership, the proportion of enforcement actions targeting individuals (rather than corporations) has increased compared to previous years, from nearly 20% in 2013-2020 to 35% in 2021 and 50 % in 2022.” It also says in the report.

SEC wants to set precedents

Anne-Sophie Cissey, chief legal officer at crypto service provider Flowdesk, is convinced that the SEC wants to set precedents. For this purpose, the authority has selected extra weak points in the industry. Gensler will willingly exploit the FTX fraud case.

“Obviously the FTX saga isn’t over yet. We know that Ripple’s case is also likely to be judged very soon and that Coinbase may also have to go to court.” So Cissey.

One disregarded factor in the US regulatory jumble is the CFTC, which could also become more involved.

Victoria Bills believes the SEC is setting examples on large crypto exchanges, rather than small firms. Current regulatory requirements are well suited for this. As Binance founder CZ himself explained in an internal meeting, some of these cannot be realistically implemented.

The fact that there were violations against the will of the US authorities could serve as a basis for further regulations for Gary Gensler.