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- Canadian Securities Administrators Subject Crypto Exchanges to Securities Laws
The United States Securities and Exchange Commission (SEC) has come under criticism for its constant efforts to control the crypto market by a Libertarian think tank called Competitive Enterprise Institute. In a report recently published by the CEI, John Berlau, a senior fellow at the think tank expressed his harsh views against the SEC on its approach to regulating cryptocurrencies.
The SEC has long been contemplating whether or not cryptocurrencies fall under the securities law. Threatening strict regulations and claiming that these regulations are simply for the purpose of protecting the public interest. However, the report by the CEI claims that this effort by the SEC has been nothing but a power grab.
In the report, Berlau claims that cryptocurrencies and blockchain technology are transformative innovations and that their growth and development has been greatly stunted by the “burdensome regulation.” He is of the view that “among federal financial regulatory agencies, none poses a greater threat to cryptocurrency and the associated blockchain technologies than the Securities and Exchange Commission.” Quite a bombastic assertion.
Berlau further argues in the report that considering cryptocurrencies in the same bracket as other securities could cause it to go out of the reach of middle-class investors, which could greatly harm the development and growth in the market. The rise of cryptocurrencies to the popularity that they enjoy today is because of their ability to remove the need for institutional investors and get public funding, and reduce the chokehold of banks and financial institutions on the economy.
Berlau states in the report:
“Both from SEC regulations and from financial regulation laws such as the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010 — that has hindered small investors’ access to stock in early-stage growth companies.” He was also against the idea of using the Howey test to determine whether or not cryptocurrencies are securities. The practice has been used by the SEC and the Supreme Court previously for this purpose. He said that such a test gave the commission power to bring many cryptocurrencies under its shadow and gave it “the power to regulate many cryptocurrencies as securities.”
The SEC has long been claiming its power over the crypto space. By keeping the definition for securities vague, the SEC has essentially allowed itself to claim regulative authority over any project that it wants. This sets a dangerous precedent as these methods could be used to greatly curb certain targeted projects and in turn the crypto market overall.
This is not the first pro-crypto maneuver by a Libertarian entity. Several months ago, one of the most conspicuous U.S. Libertarian figures, former congressman Ron Paul, has asserted that cryptocurrencies should receive a special full tax exemption. In addition, a Libertarian candidate from Wisconsin who ran for the state’s governorship has enabled Bitcoin donations in July last year; the Libertarian Party has already been accepting Bitcoin donations since 2013.