The agency’s aggressive policing has sparked a wave of criticism from digital assets firms and advocates on Capitol Hill for what they describe as regulatory overreach.
A top U.S. Securities and Exchange Commission (SEC) official on Friday rejected criticism of the regulator’s cryptocurrency crackdown and slammed the sector for violating securities laws.
The regulator’s heightened scrutiny of crypto firms comes in response to the industry’s failure to comply with the agency’s regulations, SEC enforcement director Gurbir Grewal said at a Rutgers University and Lowenstein Sandler LLP event in New York.
“We have worked thoughtfully and incrementally in this space,” Grewal said on Friday. “Typically you’d also see compliance but we’re not seeing that in this space, so we had to change strategies.”
The SEC began targeting initial coin sales as unregistered securities offerings, but has increasingly focused on crypto firms acting as unregistered exchanges and broker-dealers.
The crypto sector has said that existing U.S. regulations are inadequate and called for new rules. On Friday, Grewal questioned whether such new rules would work to tamp down misconduct.
“Even if you came up with a bespoke rule set, you have an entire industry where the ethos is built around noncompliance,” he said.
The SEC last week sued Binance and Coinbase, two of the world’s largest crypto exchanges, for allegedly breaking its rules. The SEC’s actions were the latest in a crypto crackdown that has gathered pace under Democratic leadership.
Binance and Coinbase have both denied the allegations and have accused the SEC of walking away from the firms’ efforts to cooperate and come to a resolution. Coinbase has said the agency hardened its stance and became less willing to work with crypto firms in the wake of the FTX scandal in late 2022.