The policy expert for the cryptocurrency advocacy group Blockchain Association says that despite attempts to police cryptocurrency through enforcement actions, United States financial regulators “are bound by legal reality,” and Congress will ultimately decide what regulations should be put in place for cryptocurrencies.
Jake Chervinsky, the chief policy officer of the organization, contributed his thoughts to a lengthy Twitter conversation on the topic of the current status of crypto policy on February 14.
He made the observation that the Securities and Exchange Commission as well as the Commodity Futures Trading Commission “do not have the ability to completely oversee cryptocurrency.”
Given the ideological divide that exists between the House Republicans and Senate Democrats, Chervinsky is of the opinion that a compromise on the crypto legislation is “unlikely.” He said that the Securities and Exchange Commission and the Commodity Futures Trading Commission had exceeded their powers in an effort to “get things done” without Congress.
Chervinsky issued a plea for the sector to maintain its composure in the wake of the recent flurry of action from the SEC, which he referred to as “crypto’s biggest opponent.” As an example, Chervinsky cited the SEC’s crackdown on staking services.
The settlement that the SEC reached with the cryptocurrency exchange Kraken on February 9, which forbade Kraken from ever selling staking services to consumers in the United States, has been publicly criticized by SEC Commissioner Hester Peirce.
Peirce expressed his disagreement with the majority opinion in a statement dated February 9, in which he said that regulating a growing business via enforcement “is neither an effective or equitable manner of governing” the industry.
It was proposed by Chervinsky that litigation is one method the cryptocurrency business may press for appropriate legislation. Chervinsky said that the court plays a key role in influencing policy that has been “ignored.”
Coinbase, a cryptocurrency exchange, is also the subject of an SEC investigation that is similar to the one that led to Kraken’s settlement.
A more stronger position has been adopted by Coinbase CEO and co-founder Brian Armstrong, who believes that it would be disastrous for the United States to do away with staking for cryptocurrencies.
In a tweet dated February 12, Armstrong contended that Coinbase’s staking services are not securities and said that he would “gladly defend this in court if it were necessary.”
The decisions that judges make in important cases establish new standards in the law. If such a case were to be taken before a court and the judge concluded that Coinbase’s staking services did not qualify as securities, then other cryptocurrency businesses who are in a situation comparable to Coinbase’s may utilize the precedent as part of their defense.