- Paradigm, a Web3 VC firm, criticized SEC Chair Gary Gensler’s “brute force” crypto regulation as bad policy.
- The firm claimed that SEC failed to give crypto users and investors necessary information required for registration process.
Paradigm, a Web3 venture capital firm, published a policy statement on 20 April on the issues surrounding the SEC’s registration.
It asserted that SEC Chair Gary Gensler’s attempt to “brute force” crypto assets that may not even constitute ‘securities’ into an ill-fitting disclosure framework is bad policy.
The firm claimed that the SEC failed to give crypto asset users and investors the necessary information required for the registration process. It also questioned the SEC’s claims that the regulatory body provides a feasible path to compliance for crypto entrepreneurs.
According to Paradigm, the present disclosure policy was created in the 1930s, long before the internet existed. It contends that current laws are “tailor-made for centralized companies issuing securities” and that cryptocurrency markets are fundamentally different.
The paper said:
“Crypto asset markets differ in meaningful ways from securities markets. As a result, crypto requires a different regulatory framework with disclosures tailored to the unique nature of crypto assets and market regulation that reflects the “stack” on which crypto assets trade.”
The firm highlighted that securities provide the holder with legal rights against a centralized establishment. Most cryptocurrencies, on the other hand, do not provide “legal rights” but rather “technological abilities in a protocol.”
Furthermore, crypto assets can function independently from their issuer. Paradigm argued that crypto assets can be traded peer-to-peer and on a fundamentally new technology stack. This is in contrast to traditional securities and equities, which are traded in an “archaic system” full of intermediaries.
SEC needs to update its policies
The firm opined that the SEC needs to take stock of new financial technologies. Additionally, it needs to update its existing policies so as to incorporate these emerging entities.
Pro-crypto Congressman Warren Davidson also expressed his displeasure with the agency and its top bosses. Earlier this week, Warren proposed legislation to replace SEC Chairman Gary Gensler with an executive director who reports to the board.
Yep. To correct a long series of abuses, I am introducing legislation that removes the Chairman of the Securities and Exchange Commission and replaces the role with an Executive Director that reports to the Board (where authority resides). Former Chairs of the SEC are ineligible. https://t.co/VBnkgt8bhM
— Warren Davidson 🇺🇸 (@WarrenDavidson) April 16, 2023
In an 18 April hearing on SEC oversight, Gensler was grilled by House Financial Services Committee Chairman Patrick McHenry.
“Clearly, an asset cannot be both a commodity and a security,” McHenry argued as Gensler declined to clarify how Ethereum [ETH] should be classified.
Source: https://ambcrypto.com/vc-firm-paradigm-criticizes-secs-brute-force-regulation-policy-details-inside/