SEC Commissioner Uyeda Challenges Proposed Crypto Audit Trails

TLDR

• SEC Commissioner Mark Uyeda opposes consolidated audit trails (CAT) for crypto, calling it regulatory overreach
• Uyeda criticizes SEC’s approach to crypto regulation without clear guidelines
• Republicans likely to confront SEC Chairman Gary Gensler during upcoming testimony
• Uyeda argues CAT violates privacy and represents excessive surveillance
• SEC’s handling of crypto regulations deemed unfair by Uyeda

In a recent development within the U.S. Securities and Exchange Commission (SEC), Commissioner Mark Uyeda has expressed strong opposition to the implementation of consolidated audit trails (CAT) for cryptocurrencies.

Uyeda’s comments come just a day before SEC Chairman Gary Gensler and five commissioners are set to testify before the House Financial Services Committee.

Uyeda, known for his crypto-friendly stance, criticized the proposed CAT system in an interview with Fox Business. He argued that such a system, which would track sensitive investor data, represents regulatory overreach and poses a significant threat to privacy.

“The Consolidated Audit Trail is a system that one would expect to find in a surveillance state, not the land of freedom and liberty,” Uyeda stated.

The commissioner’s concerns align with those of Republican lawmakers who have consistently opposed what they perceive as regulatory overreach and increased government surveillance in the crypto industry.

These lawmakers have expressed growing unease about the SEC’s unrestricted access to traders’ sensitive personal information through the CAT system.

Adding to the controversy, the SEC has demanded that broker-dealers and industry participants help fund the database by paying fees tied to their trading volumes. Uyeda pushed back against this requirement, suggesting that it places an unfair burden on market participants.

Beyond the CAT issue, Uyeda took aim at the SEC’s broader approach to crypto regulation. He argued that the commission has failed to provide a comprehensive list of crypto firms that can operate in the United States, leaving the industry in a state of uncertainty.

“We have not provided the rules of the road for crypto, other than to declare that nearly all are securities, nor have we provided a practical pathway to comply with our rules,” Uyeda explained.

The commissioner further criticized the SEC’s use of enforcement actions in the crypto space, suggesting that these actions provide limited guidance at best and waste time and money.

He argued that the SEC’s approach of presuming everyone in the market to be a potential scammer unless proven innocent is misguided and “not the American way.”

Uyeda’s comments reflect a growing divide within the SEC and among lawmakers regarding the appropriate regulatory approach to the crypto industry.

While some, like Chairman Gensler, have advocated for stricter oversight, others, including Uyeda, argue for a more balanced approach that supports innovation while still protecting investors.

The timing of Uyeda’s remarks is significant, coming just before Gensler’s testimony to the House Financial Services Committee. It’s expected that Republican lawmakers will use this opportunity to challenge Gensler on the SEC’s tough regulatory stance on cryptocurrencies.

In addition to his criticisms, Uyeda offered his vision for the SEC’s role, stating that the commission should focus on empowering Americans to make independent financial decisions, supporting U.S. companies’ global competitiveness, and restoring public accountability in the rule-making process.