The U.S. Securities and Exchange Commission’s (SEC) approach of crypto regulatory enforcement has stalled the advancement of Bitcoin (BTC) in the country, according to the CEO of Grayscale Investments.
In a letter published in the Wall Street Journal on January 17. On December 23, the chief of the cryptocurrency asset management firm, Michael Sonnenshein, said he agreed with a claim that the SEC was “late in the game” regarding the regulation of crypto and preventing the bankruptcy of FTX, adding:
“‘Late’ doesn’t capture what happened here. The problem is the Securities and Exchange Commission’s one-dimensional enforcement approach to regulation.”
Grayscale is currently suing the SEC for refusing to convert its Bitcoin trust into a cash Exchange Traded Fund (ETF).
He clarified that the SEC “should certainly try to weed out bad actors” but that it should not hamper “efforts to develop appropriate regulation.”
— Sonnenshein (@Sonnenshein) January 23, 2023
The regulator’s inaction to prevent these bad actors from entering the crypto industry “has prevented Bitcoin’s advancement within the US regulatory perimeter,” Sonnenshein wrote.
This has forced US investors to use offshore crypto businesses “with less protection and oversight,” he said.
“We see the consequences of SEC priorities unfolding in real time – to the detriment of US investors.”
Cointelegraph has contacted the Securities and Exchange Commission for comment.
Sonnenshein’s opinion piece comes as Grayscale is suing the SEC for “arbitrarily denying” Grayscale’s plans to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF.
The SEC argued that Grayscale’s proposal did not sufficiently protect against fraud and manipulation. Grayscale countered by saying that the SEC arbitrarily treats spot-traded products differently than futures-traded products.
Grayscale is owned by crypto conglomerate Digital Currency Group (DCG), which is currently struggling financially.
DCG also owns the bankrupt Genesis Trading, which was indicted by the SEC on Jan. 28. 12 for allegedly selling unregistered titles.
Related: SEC leaked personal information of crypto miners during investigation: report
Over the weekend, John Reed Stark, a crypto skeptic and former SEC chief, lambasted the term “regulation by app,” calling it “Bogus Big Crypto Catch Phrase.”
In a Jan. 22 post on Linkedin, he said the term was a “misguided and devious effort designed to tap into sympathetic libertarian and anti-regulatory mores,” and called it “total nonsense.”
He argued that “litigation and enforcement of the SEC is really how securities regulation works.”