In October 2021, the U.S. Securities and Exchange Commission (SEC) came under criticism from its own commissioners over how it handles crypto enforcement, following a settlement with cryptocurrency company ShapeShift.
The settlement involved ShapeShift, a crypto trading platform, agreeing to pay $1.7 million over allegations that it violated federal laws by operating an unregistered securities exchange. ShapeShift did not admit or deny wrongdoing in the settlement.
Two SEC commissioners, Hester Peirce and Elad Roisman, criticized the agency’s enforcement strategy on crypto in a public statement. They argued that the actions taken by the SEC do not offer clear guidance for cryptocurrency businesses on how to operate within the law. They also pointed out that the SEC’s decision to pursue enforcement before establishing clear regulations puts businesses in an unfair position.
While the SEC has been taking action against cryptocurrency companies it believes are operating outside of federal securities laws, it has not yet established clear regulations for the industry. This lack of regulation has been a major point of contention within the cryptocurrency industry and has led to criticism from both inside and outside the SEC.
In their statement, Peirce and Roisman urged the SEC to develop a clear framework for crypto regulation to give businesses a chance to operate within the law and provide transparency for investors.
