SEC Seems “Strangley Amateurish” Says Paul Graham – Trustnodes

Paul Graham, the founder of the Silicon Valley based startup incubator Ycombinator, has called the Securities and Exchanges Commission (SEC) “amateurish.”

“They do seem strangely amateurish, for a government agency,” Graham publicly said.

That was in reply to Jason Gottlieb, a lawyer who pointed out that there is no way to register crypto products which SEC says are securities:

“I find the SEC’s ‘all crypto projects have to do is come in and register’ line unbelievably insulting.

It assumes there’s this vast quantity of sophisticated securities lawyers advising clients, ‘nah man, screw the SEC, yolo baby, do whatever you want.’

Tons of projects (and their lawyers!) desperately *want* to come in and register. But when they do, they’re just told ‘no.’ Or worse, they draw a Wells notice (or, as Hester Peirce said, a court date).

There is simply no path to registration for many crypto products. The SEC says ‘just register.’ We say ‘cool but … as what?’ Because the regs just don’t fit.

In response, we get blank stares, apologies, and mumbles that they’re not going to give us legal advice.

If the new de facto rule is ‘crypto = no,’ that rule has to come from Congress, or at least through an APA process. Not through enforcement.

Going on CNBC to say that registration is ‘just a form on our website’ is a painful misrepresentation of the registration process.

Again: it’s just insulting. It brands a whole industry (and its lawyers!) as scofflaws, who don’t bother following easy rules, instead of the reality: people desperately trying to figure out how to offer a product legally, and getting zero guidance other than ‘no.’

If registration were possible, we’d do it. Give us a pathway. Show us it can be done efficiently, or at all, and watch the flood of registrations.

Or, don’t, and watch the industry move offshore, and watch America get left behind in the next wave of FinTech.”

Unlike Europe and the United Kingdom, the United States has neither passed nor proposed any laws or regulatory guidance on cryptos.

“The EU’s regulatory landscape concerning stablecoins is much clearer,” says Patrik Johansson of Membrane Finance, one of the first EU regulated stablecoin issuer of EUROe. He adds:

“EU-based stablecoin operators are regulated by the European Anti-Money Laundering Directive 5 (AMLD5), which is implemented into member states’ national legislation.

However, e-money stablecoins, such as EUROe, are regulated under the European E-Money Directive and Payment Services Directive 2 (PSD2).

These clear regulatory guidelines ensure that electronic money stablecoins, such as EUROe, are not operating in the grey areas, and their users can be sure of the legal framework under which such stablecoins are regulated.”

In the US instead SEC in particular is trying to frontrun Congress and a Biden executive crypto order on a wholistic approach, to the point SEC now thinks even stablecoins are a security under their jurisdiction.

Tokenized dollars however are dollars, and it is the Federal Reserve Banks that have oversight over fiat, not SEC.

How to regulate such dollars is worthy of debate, but SEC’s approach seems to be just shut it down with bUSD ordered to stop minting.

That provides a unique opportunity for European based startups, where there’s legal certainty, with the Biden administration now taking the credit of creating a hostile crypto environment in US.