Mark Cuban pointed out the underlying obscurity in the current crypto regulations, calling for a simpler version. The complexity and ambiguity of the statute create an unfavorable environment for the crypto space and related startups.
He raised concerns regarding the regulatory crackdown on the crypto industry carried out by the financial watchdog of the United States, the Securities and Exchange Commission.
Mark Cuban Wishes for SEC Crypto Regulations to be Simple
Cuban stated that the existing rules for the crypto startups and those operating in the realm of Web3, are complex and fail to serve the desired purpose. The billionaire suggested that the SEC and Congress sit together and design a straightforward system that benefits crypto tokens, exchanges, and regulators.
This elaborate arrangement would cater to the increasing needs of new startups and help establish industry players. Most importantly, he argued that it must focus on ensuring investor protection.
John. I think you are misreading the impact of what the judge said. It’s not related to this suit.
Not all crypto businesses that have tokens or are considering using tokens are large “enterprises”. Which is the assumption, I believe you are making. (Correct me if I’m wrong…
— Mark Cuban (@mcuban) June 14, 2023
Furthermore, Mark Cuban opened up about the obscurity of the regulatory guidelines provided by the authorities. This is a scenario that spells a premature death for promising startups that are working tirelessly. Additionally, the regulatory pressure from the SEC and chair Gary Gensler is an added burden.
The entrepreneur pointed out that the regulatory authorities should work hand-in-hand with the government and amend certain exemptions provided to the crypto industry. He further underscored the fact that a simplified registration process and a workable environment for the exchange would be beneficial in the long run.
Cuban argued that investor protection and industry growth could be made possible simultaneously with the right course of action. He also added that the SEC should avoid determining the legitimacy of select technologies in the realm. The agency deemed 68 crypto tokens and currencies as securities during the recent lawsuits.
SEC – Crypto Industry’s Friend or Foe?
Following the infamous FTX saga when the world’s third largest crypto exchange filed for bankruptcy on November 11, 2022, the regulatory actions taken against crypto by the SEC swelled by 183%. The major collapse wiped out billions and intensified the need for a regulatory framework. In 2023, the agency has so far taken around 17 actions against the crypto industry.
The majority of these lawsuits revolve around tokens deemed to be unregistered securities. This sparks a debate about the classification of cryptocurrencies, of whether they are commodities or securities. If cryptocurrencies are treated as commodities, they inadvertently fall under the jurisdiction of the primary U.S. regulator, the Commodity Futures Trading Commission (CFTC). If they are treated as securities, then the SEC would police them.
As per Gary Gensler’s statement in April 2022, the top five exchanges managing 99% of cryptocurrencies’ trading “likely are trading securities.” Consequently, the argument is that they should get registered under the agency and comply with existing laws. In May 2022, he announced swelling up the staff at the Cyber Unit from 30 to 50 and renamed it to Crypto Assets and Cyber Unit—a unit that would help in enforcement actions for crypto entities.
Coinbase, which was recently served a lawsuit, had asked the agency multiple times for the details about crypto regulations to be followed. Now the court has asked the SEC to heed Coinbase’s request and provide regulatory clarity. The agency has asked for another four months to respond.
If the top governing authority cannot provide regulatory clarity to one of the top crypto exchanges in the U.S., then the plight of smaller startups can be imagined. This is why there is a need for a clear regulatory framework.
The SEC is trying to safeguard customers from indulging in non-regulated markets. However, this course of action is proving to be a double-edged sword for the financial watchdog.
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.
Source: https://www.thecoinrepublic.com/2023/06/18/mark-cuban-desires-for-simplicity-in-sec-crypto-regulations/