Pro-Bitcoin Senator Cynthia Lummis Critiques SEC’s Approach to Crypto Regulation Following Kraken Lawsuit
Wyoming Senator Cynthia Lummis leveled criticism against the US Securities and Exchange Commission (SEC), questioning the approach adopted by the regulator to establish crypto regulation in the crypto space. The pro-crypto senator published a critique post on X (formerly Twitter) disapproving of the regulation by enforcement approach against firms operating within the cryptocurrency space.
Kraken Accused of Violating Registration Provisions in Securities Laws
Senator Lummis published the post following the Monday, November 20 move by the Gary Gensler-chaired SEC to sue the US crypto exchange Kraken. The securities watchdog alleged that the Dave Ripley-led Kraken exchange offered unregistered securities for trade, including Solana (SOL), Polygon (MATIC), and Cardano (ADA), among others.
Senator Lummis castigated that SEC excluded XRP, attributing it to the July ruling when Judge Analisa Torres granted a partial victory to Ripple Labs. The New York’s Southern District Court judge dismissed SEC’s argument that XRP in retail sales constituted security.
Senator Lummis Slams Securities Regulator for Ruling by Enforcements
Senator Lummis’ statement on X faulted the SEC for reigniting the approach to rule by enforcement even when multiple crypto firms requested the regulator to formulate definitive rules. The Republican senator observed that the SEC was often served with requests to help establish crypto-specific rules for the space of digital currencies.
The pro-crypto Senator Lummis attributed the multiple requests from crypto firms aimed at averting the SEC and other federal regulators picking on them. Crypto-specific rules would eradicate the possibility of suffering enforcement actions previously imposed against Ripple Labs, Kraken, Coinbase, and Binance.
Senator Lummis argued that the enforcement actions handed by the SEC and other regulators harm the consumers unnecessarily. She urged Congress to enact a regulatory framework offering clarity that has become elusive to the US crypto space. The Wyoming Senator opined that the regulation should specify the crypto asset qualifying as security to allow digital assets identified as commodities to follow different legislation.
Kraken’s Powell Disapproves of SEC Charges
Kraken ex-chief executive Jesse Powell expressed sharp disapproval of the SEC’s move, joking that the $30 million civil penalty settled in February earned the crypto exchange ten months for the SEC to level additional charges.
Kraken’s former chief executive published his comment on the X platform, reproaching the SEC for filing the lawsuit against the platform. He labeled the charges level against the San Francisco-headquartered crypto exchange another assault on America.
Powell reminded the Kraken community that the crypto exchange already faced enforcement action at the onset of 2023. However, he admitted that Kraken got off lightly with a $30 million fine and a directive to terminate the crypto staking service program in the US.
The Kraken co-founder accused the SEC of becoming the USA’s top decel, alleging the regulator was shopping for another flavor of RegDom in California following the legal beatings it suffered in the New York courts. Although noncommittal, Powell referenced the series of losses SEC suffered against Ripple Labs (XRP) and Grayscale Investments (GBTC).
SEC’s Enforcement Actions Labeled Decelerators and Turning US into Crypto Warzone
Powell inferred the ‘decel’ label to the SEC, a word utilized by tech enthusiasts to imply deceleration posed by doomsayers as a hindrance to the sector’s progress.
Powell turned ironic in his commentary that he, through Kraken, settled their concerns for a $30 million fine. He indicated that the accusations of Kraken operating an unregistered securities exchange, brokerage, dealer, and clearing agency amounts to the SEC’s subsequent round to extort.
Powell highlighted whether the SEC cared about the cost incurred and invaluable time wasted by crypto firms in legal battles, citing the Ripple Labs’ proceedings. He admitted that only crypto companies ready to spend such resources have an opportunity to escape the danger zone.
Powell argued that $30 million only bought Kraken’s freedom for ten months before the SEC sued the crypto exchange. He demonstrated that lawyers could realize a lot when allocated the $30 million, though SEC knows that lodging the real fight would exceed the hundred million dollars.
Powell warned that if the crypto company cannot meet the high legal fees and time involved, recent cases exit the US warzone quickly. The comments echo Senator Lummis’s pronouncement that SEC’s enforcement actions translated to US loss as it forced crypto talent and projects to exit.
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