Is There a “Gap” In Crypto Regulations? Contradicting Ideas

• Stuart Alderoty and John Deaton point out contradictions between Senate Yellen’s and the SEC’s assertions.
• US Senate Janet Yellen called for Congress’ action to fill the gap in crypto regulations.
• In a Coinbase hearing, the SEC argued that there is no gap in the regulation.

U.S. Senate Janet Yellen’s urgent call for Congress to regulate the crypto sector has recently garnered attention. Prominent figures, including Ripple’s Chief Legal Officer, Stuart Alderoty, and XRP attorney John Deaton, spotted Senate Yellen’s words contradicting SEC’s previous statements.

Earlier this week, Senator Yellen urged Congress to pass new legislation to provide clarity in crypto regulations. Yellen pointed out the potential risks of the evolving crypto sector and pointed out the necessity to fill the gaps in crypto regulation.

Yellen further reinforced her points by highlighting the FTX debacle that drove the crypto industry into a long crypto winter. She also shared insights on the use of digital assets in illicit activities, including financial terrorism, and called for effective oversight of the market.

Previously, in a Coinbase hearing, the Securities and Exchange Commission (SEC) painted crypto as a “rounding error.” The regulators also asserted that there are no “legislative gaps.” 

While the SEC’s assertions and Yellen’s recent statements proved to contradict, Alderoty questioned the inconsistency, stating,

In Coinbase, the SEC told the judge that crypto is a “rounding error,” no legislative gaps exist and thus, crypto can be “swept” into its authority. Yesterday, Sec. Yellen told Congress crypto legislation is needed to fill regulatory gaps. Both statements can’t both be true.

The key aspect revolving around the regulators’ tussle with the crypto companies is the pertinent question of whether crypto assets are securities. Despite XRP’s partial victory against the SEC in their lawsuit, no final decision has been made.