SEC's Crenshaw stated that institutions are playing a "regulatory stacking" game with the Crypto Assets industry.

Source: Cointelegraph Original text: "SEC's Crenshaw says institutions are playing a game of 'regulatory stacking' with the cryptocurrency industry"

The only Democratic commissioner of the U.S. Securities and Exchange Commission stated that the agency's approach to regulating the cryptocurrency industry and market under the Trump administration is like "playing a game of layered regulation."

In a speech at the SEC Speaks event on May 19, Commissioner Caroline Crenshaw issued a stern warning about what she described as the dangerous dismantling of "independent yet interconnected rules" (for cryptocurrencies and the broader market).

She likened market stability to a "tower of layers", which is the "system of rules carefully built by the institution over the years"; if certain rules are removed, the entire structure could collapse.

In addition to the unfortunate issue of talent loss, Crenshaw pointed out that the SEC has reversed rules using staff guidance without proper analysis or public comment, especially in the cryptocurrency sector.

"Our statement regarding these cryptocurrency-related issues is essentially equivalent to a wink, intended to convey that we do not intend to strictly enforce existing regulations in specific circumstances."

She further added that regulators have abandoned enforcement actions, especially in the cryptocurrency market, which has led to what she calls a "non-enforcement regulatory" phenomenon.

"I am deeply concerned about the committee's practice of abandoning a large number of enforcement plans," she said.

Crenshaw is the only remaining Democratic commissioner at the SEC, and she stated that the agency's "sudden shift" raises numerous issues, such as damaging its reputation in court, undermining its credibility, and calling into question the status of "long-standing fundamental case law."

Crenshaw once opposed the SEC's settlement with Ripple, and in her latest speech, she stated that the collapse of FTX in 2022 is a typical example of a "massive cryptocurrency crisis."

"These risks have not disappeared, but the calls for strict regulatory scrutiny have quieted down significantly," she said.

"Failing to understand and address these risks and complexities will inevitably lead us to repeat past mistakes at a high cost as cryptocurrency increasingly intertwines with traditional finance."

In contrast, the Republican commissioners of the SEC welcomed the agency's embrace of the cryptocurrency industry in their speeches.

SEC Chairman Paul Atkins stated at an SEC speaking event that "the crypto market has been stagnant in the SEC's gray area for years," adding that the agency should not hinder innovation from crypto companies.

Commissioner Hester Peirce, currently the head of the SEC's cryptocurrency working group, stated in her speech that the agency's approach under the Biden administration "deviates from sound regulatory practices and must be corrected."

She also claims that cryptocurrencies are not under the jurisdiction of securities laws because "most of the crypto assets currently in the market" are not securities.

"Even though most of the crypto assets traded today on the secondary market were originally offered and sold as investment contracts, they are clearly no longer being bought and sold through securities trading. Many of these crypto assets have functional uses."

Commissioner Mark Uyeda echoed the views of his colleagues, stating that the SEC "should strive to ensure that enforcement does not become a tool for future policy making."

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