How things have changed at the Securities and Exchange Commission (SEC).
During the last administration, digital assets were vilified to an extreme. While telling crypto innovators to come in and chat, the offer was viewed as more of a trap. Some in the cryptosphere simply relocated to friendlier jurisdictions as the SEC pursued a policy of regulation by enforcement, ignoring a profound opportunity to adapt to the times and embrace innovation.
Recently, the final nail in the coffin of the SEC’s pursuit of Ripple and its issuance of XRP was put to rest. The enforcement action targeting Ripple has taken place over the years, utilizing untold resources at the SEC. The SEC announced a stipulation to dismiss the agency’s appeals, ending a civil enforcement action against the company and two of its executives first revealed in 2020.
Today, the SEC recognizes that digital assets require tailored regulation to ensure prudent development while safeguarding investors. There is a Crypto Task Force at the SEC working with the industry to gain perspective on new rules. Legislation is advancing in Congress to further the cause.
The change between the Biden Administration and the Trump Administration is hard to underestimate. But several comments posted by SEC Chairman Paul Atkins and Commissioner Hester Peirce are emblematic of the difference.
Yesterday, Commissioner Peirce stated, “the SEC’s case against Ripple was finally laid to rest. A welcome development for many reasons, including that minds once occupied with litigation now can concentrate on creating a clear regulatory framework for crypto.”
Chairman Atkins quickly confirmed Peirce’s declaration:
“Commissioner Peirce is right. With this chapter closed, we now have an opportunity to shift our energy from the courtroom to the policy drafting table. Our focus should be on building a clear regulatory framework that fosters innovation while protecting investors.”
While history is always the judge, I predict that past SEC Chairman Gary Gensler will go down in history as having missed the single most significant opportunity to define securities law since the 1934 Act. Focused on political ambition and specious regulatory changes, the SEC spent four years of opportunity playing politics instead of doing its job and recognizing it had to adapt. Fortunately, the SEC is now led by different individuals who have the chance to become transformative policymakers. Financial markets will be better because of this.
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