In a new opinion piece, the former SEC executive says the regulatory status of most crypto assets remains in a grey area that’s hampering the growth of the wider blockchain space in the United States.
Hall further warns that using existing laws based on principles that date back to “three-quarters of a century ago” to regulate crypto assets is counterproductive.
“The movement of securities occurs within a framework designed to protect the investing public, in which intermediaries who facilitate trading in securities or hold them for others are subject to pervasive SEC oversight. This framework was not built to govern simple commercial activities like a purchase of services.
Shoehorning these activities into the securities regulatory apparatus would increase their cost and complexity to the point of being useless, or at the very least, uncompetitive with existing alternatives.”
As for the strength of the SEC’s case, Hall believes the regulatory body had much better options than to go after Ripple.
“Why on earth did the agency bring a case that was considerably less a slam dunk than its previous crypto enforcement actions? Barring a settlement, the Article III courts and not the SEC will ultimately say whether XRP is a security.
There are plenty of digital assets with more tenuous use cases than XRP, any one of which might have better helped the SEC etch its views into federal case law before taking on a leviathan like Ripple Labs… A loss on the merits in the XRP litigation could epically damage the SEC’s regulatory project when it comes to digital assets.”
Hall proposes that the SEC adopt a more nuanced approach to regulate crypto assets rather than a “hardline enforcement-first approach.”
He recommends the agency use its notice-and-comment rulemaking abilities to give companies the knowledge they need to comply with regulators.
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