US SEC’s compliance stance challenged by XRP Attorney Deaton & Coinbase CLO Grewal. Seeking adherence seen as breach, affecting crypto’s transparency and legitimacy.
In a bold challenge to the practices of the United States Securities and Exchange Commission (SEC), prominent figures in the cryptocurrency space, including XRP attorney John Deaton and Coinbase Chief Legal Officer (CLO) Paul Grewal, have denounced the regulatory body’s stance on seeking compliance as a violation of security laws.
Paul Grewal, the CLO of Coinbase, a major cryptocurrency exchange, has voiced his concerns over the SEC’s reluctance to provide guidance to crypto companies on ensuring compliance with regulatory frameworks. He questions the SEC’s position of interpreting such efforts as indicative of an intention to flout the law. Grewal’s stance underscores the frustration and uncertainty that pervades the relationship between the cryptocurrency industry and regulatory bodies.
US SEC’s Impact: Deaton And Grewal On Discouraging Crypto Conduct
XRP attorney John Deaton, a vocal advocate for the XRP cryptocurrency and its parent company Ripple, has echoed Grewal’s sentiments. Deaton and Grewal both contend that the SEC, under the leadership of Gary Gensler, has fostered an environment that discourages responsible conduct within the crypto sphere. This alleged approach of the SEC includes using companies’ voluntary disclosures and operational intricacies against them when pursuing enforcement actions.
Deaton, in agreement with Grewal’s perspective, stated, “Paul is on point here.” He lamented that the SEC’s outlook on cryptocurrencies has been predominantly negative, leading the agency to impede efforts by companies to act transparently and comply with the law. Deaton further elucidated that the SEC’s interpretation even extends to viewing seeking advice on lawful token sales as an indication of an intent to contravene Section 5 of the Securities Act.
Elaborating on the regulatory dilemma, Deaton remarked, “In the scenario where you are open and publicly reveal collaborations with external parties, in addition to token sales, the SEC manipulates this information against you. They contend that by doing so, you are essentially showcasing shared interests with all token holders. Subsequently, the SEC equates this to participating collectively in an enterprise alongside all token holders.”
The issue at hand reveals a broader challenge for cryptocurrency companies that strive for transparency to build trust among their customers. While entities like Coinbase and Ripple believe that open communication fosters credibility, the recent actions of the SEC have thrown a wrench in these efforts, creating a dilemma for crypto businesses.
The perceived adversarial relationship between the SEC and the cryptocurrency industry is further exemplified by the SEC’s attempts to appeal Judge Torres’ ruling that the programmatic sales of XRP do not classify as securities. This move has garnered criticism from across the industry, adding to the tension between regulatory authorities and crypto companies.
It is worth noting that these concerns emerge amid reports that Coinbase CEO Brian Armstrong struggled to secure a meeting with SEC Chair Gary Gensler, while prominent crypto figure Sam Bankman-Fried had the opportunity for not one, but two private meetings with the regulatory head. Additionally, the SEC’s current assertion that Coinbase’s public listing approval from two years ago is now considered illegal has fueled the uncertainty surrounding the industry’s regulatory landscape.
As the crypto industry grapples with compliance and regulation, the clash of ideologies between the SEC and the companies seeking to operate within its boundaries continues to be a matter of critical concern. With the future trajectory of cryptocurrencies at stake, this contentious relationship may shape the evolution of the industry for years to come.