SEC is the Wrong Agency to Police Crypto As Per Hinman Documents

The much-awaited Hinman documents were unsealed on June 13, arguing that the SEC might not be the right agency to govern digital assets. The records offer priceless insights into a notable speech delivered by Bill Hinman, the former director of the United States Securities and Exchange Commission’s division of corporation finance in 2018. 

Is SEC the Right Agency to Govern Crypto

During the speech of 2018, Hinman shared his personal views on the second largest cryptocurrency by market cap, Ether. He argued that it should not be placed on the securities shelf. The documents contain internal communications within the SEC’s Washington D.C. office. Sheds light on how the agency discussed and considered following Hinman’s speech. 

Crypto lawyer and founder of CryptoLaw, Jon Deaton, also shared his expertise on the significance of the documents. He argued that they should prove valuable in the agency’s ongoing cases with Ripple, Coinbase, and other crypto entities. He further discussed the documents’ potential to influence public opinion. This influence would help shape a comprehensive and transparent regulatory framework for the crypto industry. Additionally, they would help amend existing laws towards better interpretation and implementation. 

Deaton also spoke about the document’s dual benefits, which would help Ripple, Coinbase, and other crypto entities facing unjust regulatory actions from the agency. The influence these documents could have on the jury could work out in the defendants’ favor. They also highlight the conflict of interests between Jay Clayton and William Hinman. Jay Clayton was the former chair of the Securities and Exchange Commission. 

Arguing about the infamous Ripple vs. SEC case that has been ongoing since December 2020, Deaton spoke about the impact of the document on the matter. Although the papers do not directly help Ripple in the case, they provide a window for argument. They can be used to argue that the speech by Hinman caused market confusion and created obscurity among market participants. 

Deaton also pointed to the documents’ potential impact on the Ether and ERC-20 tokens, suggesting that they could elevate Ether’s position by limiting the chances of it being classified as a security. Overall implications of the documents could be that they undermine the need for Congress to intervene and provide clarity over the governance of digital assets. 

U.S. Lawmakers Seek to Fire Gary Gensler

The SEC Commission chair, Gary Gensler, is now perceived as enemy number one of the crypto industry. Gensler is facing a backlash for constant attacks on the industry and for attempts to rebrand every other crypto token/currency as a security. 

Recently, a bill was introduced in the lower chamber of the United States Congress, seeking paradigm changes for the financial watchdog of the U.S., including showing the door to the current chair, Gary Gensler. 

A representative from Ohio, Warren Davidson, and a  representative from Minnesota and House Majority Whip, Tom Emmer, introduced the bill on June 12, 2023. The bill is called the SEC Stabilization Act and will work towards restructuring the operation of the SEC along with replacing the chair. 

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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