“We would love to understand if regulators in the United States want to regulate crypto lending and work with the industry to define what they care about there and define the rules of engagement,” Allaire said. “The United States has been extraordinarily reluctant to provide clarity around digital assets.”
Enforcers, for their part, believe the law is already clear. During the banking hearing, Gensler pointed to long-standing court decisions that helped define the agency’s purview, and said many crypto products and even cryptocurrencies probably fall into its remit.
Gellasch, the former SEC counsel, said that if exchanges are found to be offering securities, that could force them to register with the agency.
Some crypto advocates in Washington said they hope spats such as the one between the SEC and Coinbase do make it to court, so that a judge, rather than agency employees, can determine what’s in bounds for the firms.
“I want them to have the courage of their convictions and fight it if they really think their product isn’t a security,” said Jerry Brito, executive director of Coin Center, a crypto advocacy think tank.
Joe Rotunda, director of the enforcement division for the Texas State Securities Board, said that other crypto lending firms shouldn’t expect his agency or other states to hold back even as the SEC starts to move.
“I’m very relieved to see that federal regulators are taking a close look at cryptocurrency depository accounts,” said Rotunda, who said his agency and others are still investigating other firms that offer similar products. “At the same time, they still haven’t done anything.”
This article was provided by Bloomberg News.