Tightened SEC regulation of the cryptocurrency industry represents a potential “nightmare” for the struggling sector, whose prices already have been battered by surging interest rates and recession fears, billionaire Mark Cuban warned on Twitter.
The senator said the SEC took an enforcement action without clarifying why it views certain digital coins as “securities” similar to stocks or bonds.
“Yesterday’s enforcement action is the perfect example of the SEC having a clear opinion on how and why certain tokens classify as securities,” said Toomey, ranking member of the Senate Banking Committee. “Yet the SEC failed to disclose their view before launching an enforcement action.”
“Think this is bad? Wait till you see what they come up with for registration of tokens,” Cuban tweeted in response to Toomey. “That’s the nightmare that’s waiting for the crypto industry. How else do you keep thousands of lawyers employed and create reasons to ask for more taxpayer money?”
The Post has reached out to the SEC for comment.
The possibility of requiring the registration of cryptocurrencies as a form of security is a matter of intense debate as the feds mull potential regulations for the industry. The debate intensified last week after the SEC unveiled insider trading charges against the ex-Coinbase employee, Ishan Wahi, as well as his brother and a friend.
The feds allege that the trio used confidential information to buy up cryptocurrencies just before the public learned that Coinbase would list them on its platform. The alleged scheme generated more than $1 million in profits.
The SEC said that it considers at least nine of the 25 tokens that the trio purchased as securities – a definition that could open up Coinbase and other crypto platforms to much stricter federal scrutiny and regulation.
Coinbase, which cooperated with the federal investigation and eventual arrest of its ex-employee, nevertheless slammed the SEC’s handling of the situation.
“Seven of the nine assets included in the SEC’s charges are listed on Coinbase’s platform. None of these assets are securities,” the company said in a blog post. “Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange — a process that the SEC itself has reviewed.”
Cuban has frequently clashed with the SEC in the past – once defeating the agency in court after it accused him of participating in an insider trading scheme.