The approach to crypto regulatory enforcement by the United States Securities and Exchange Commission (SEC) has stalled the advancement of Bitcoin () in the country, according to the CEO of Grayscale Investments.
In a cryptocurrency asset management firm, Michael Sonnenshein, said he agreed with an assertion that the SEC was “late to the game” regarding crypto regulation and , adding:published in The Wall Street Journal on Jan. 23, the chief of the
“‘Late’ doesn’t capture what transpired here. The problem is the Securities and Exchange Commission’s one-dimensional approach of regulation by enforcement.”
Grayscale is currently suiting the SEC for denying the conversion of its Bitcoin trust to aExchange Traded Fund (ETF).
He clarified the SEC “should certainly try to eliminate bad actors” but it shouldn’t hinder “efforts to develop appropriate regulation.”
— Sonnenshein (@Sonnenshein) January 23, 2023
The inaction by the regulator to stop such bad actors from entering the crypto industry “prevented Bitcoin’s advancement into the U.S. regulatory perimeter,” Sonnenshein wrote.
This has forced American investors to use offshore crypto businesses “with less protection and oversight,” he said.
“We are seeing the consequences of the SEC’s priorities play out in real-time — at the expense of U.S. investors.”
Cointelegraph has reached out to the Securities and Exchange Commission for comment.
Sonnenshein’s opinion piece comes as Grayscale is suing the SEC for having “arbitrarily denied” Grayscale’sits Grayscale Bitcoin Trust (GBTC) to a spot ETF.
Thedid not sufficiently protect against fraud and manipulation. that the SEC was arbitrarily treating spot-traded products differently from futures-traded products.
Grayscale is owned by the crypto conglomerate Digital Currency Group (DCG), which isfinancial difficulties.
DCG also owns the bankrupt Genesis Trading, which was on Jan. 12 for allegedly selling unregistered securities.
Over the weekend, John Reed Stark, a crypto skeptic and former SEC chief,“regulation by enforcement,” labeling it a “Bogus Big Crypto Catch Phrase.”
In a Jan. 22 post on Linkedin, he said the term was a “misguided, deflective effort designed to tap into sympathetic libertarian and anti-regulatory mores,” and called it “utter nonsense.”
He argued that “litigation and SEC enforcement are actually how securities regulation works.”