According to the CEO of Grayscale Investments, the US Securities and Exchange Commission’s (SEC) approach to cryptocurrency enforcement is stalling the adoption of Bitcoin (BTC) in the country.
In a letter published by the Wall Street Journal on Jan. 23, Michael Sonnenshein, CEO of the cryptocurrency asset management firm, said he agreed with the statement that the SEC was “latecomer” on cryptocurrency regulation, preventing the bankruptcy of FTX. Sonnenshein further added:
“The term ‘late’ does not convey what happened in this case. The problem is the single-minded approach of the Securities and Exchange Commission, which is based on the enforcement of the law.”
Grayscale is currently suing the SEC over the denied converting his Bitcoin fund to a spot traded fund (ETF).
He clarified that the SEC “should certainly attempt to eliminate malicious operators”but without hindering “efforts to develop appropriate regulation”.
Doing our part to restore trust in #bitcoin and #crypto cc @Grayscale @CraigSalm @jenn_rosenthal $GBTC
Doing our part to re-instill trust and confidence in #bitcoin and #crypto cc @Grayscale @CraigSalm @jenn_rosenthal $GBTC pic.twitter.com/u72RHmGTmJ
— Sunshine (@Sunshine) January 23, 2023
The non-intervention of the regulator to prevent these operators from entering the cryptocurrency sector “prevented Bitcoin from advancing into the US regulatory perimeter”reports Sonnenshein.
This forced American investors to resort to offshore cryptocurrency companies “with less protection and supervision”he claims.
“We are seeing real-time consequences of the SEC priorities, to the detriment of US investors.”
Cointelegraph reached out to the Securities and Exchange Commission for comment.
Sonnenshein’s opinion comes alongside Grayscale’s lawsuit against the SEC for “arbitrarily denying” Grayscale’s plans to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF.
The SEC argued that Grayscale’s proposal did not sufficiently protect against fraud and manipulation. Grayscale countered by stating that the SEC arbitrarily dealt with spot traded products differently from futures products.
Grayscale is owned by the crypto conglomerate Digital Currency Group (DCG), which is currently experiencing financial difficulties.
DCG also owns bankrupt Genesis Trading, which was indicted by the SEC on Jan. 12 for allegedly selling unregistered securities.
Over the weekend, former SEC chief and crypto skeptic John Reed Stark criticized the “regulation through enforcement”labeling it as one “phrase of effect of the crypto giants”.
In a January 22 post shared on Linkedin, he said the term would be a “misleading and misleading attempt designed to tap into the sympathies of libertarians and anti-regulators”, defining it “complete nonsense”.
He finally argued that “SEC litigation and enforcement is actually how securities regulation works”.
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