The Chamber of Commerce Enters the Crypto Debate
Its brief in the Coinbase lawsuit surprises many
Ric Edelman: It's Tuesday, May 23rd. The US Chamber of Commerce, one of the most influential business organizations in the country, has now blasted the SEC over how the agency is dealing with crypto. The Chamber of Commerce has announced its support to Coinbase, which is suing the SEC to get the agency to issue rules that are clarifying what crypto companies can and cannot do instead of just issuing fines. The Chamber of Commerce has filed its own brief to the court, saying that the SEC's refusal to provide clarity to the crypto industry is, “Causing substantial economic harm to both Coinbase and the broader business community.”
The Chamber is also criticizing the SEC for its enforcement action against Kraken, another huge exchange that trades digital assets. Kraken stopped doing a lot of its business and the Chamber says this aggressive enforcement posture by the SEC is only harming investors and businesses because it's reducing the investment opportunities in the US.
And finally, the Chamber of Commerce has complained that the SEC won't even state clearly whether Ethereum, the second largest digital asset after bitcoin, is a security or not. It makes a big difference because assets that are securities have to operate under a different set of rules than assets that are not securities.
Companies that sell stocks and mutual funds, for example, have far more rules to follow than companies that sell baseball cards, artwork or rare coins. That's because stocks and mutual funds are securities. Rare coins and baseball cards are not. The SEC used to say that Ethereum is not a security, but the current SEC chair, Gary Gensler, now refuses to say whether Ethereum is a security or not.
And that means that investment advisors and brokerage firms around the country don't know what set of rules they're supposed to follow, and they're afraid they might get hit by a fine for doing something wrong when they're not being told how to do it right.
This is regulation by enforcement. It's a very frustrating and expensive way to operate a business. It's like driving on a highway without knowing what the speed limit is. And the only way you find out the speed limit is after the cop pulls you over for speeding. This is why a lot of businesses are deciding not to engage at all in crypto until the rules come out.
But Gary Gensler says he has no intention of issuing any clarifying rules. The Chamber of Commerce said last week, quote, “Ethereum has been around for almost a decade. It has a market capitalization exceeding $220 billion. And it is a fundamental building block in the industry.”
And yet regulators cannot agree on what it is. I've cautioned you over the past several weeks over the inappropriate behavior by SEC Chair Gary Gensler and his refusal to provide clarifying regulations that would allow the crypto community to operate responsibly and professionally in the effort of protecting consumers while offering a valuable business service.
Coinbase's lawsuit is before the court right now. We are hopeful for a verdict before too long, and it's going to be a very important decision that will tell us a lot about how soon we can expect regulatory clarity from the SEC.
Meantime, Congress is very busy drafting legislation that would also provide clarity. And we're hopeful to see that within the next couple of months. There's a lot going on in crypto and we're seeing an increasing number of voices expressing opposition to the behavior of SEC Chair Gary Gensler. More to come on this in coming weeks.
Hey, what are you doing today at 2:00 Eastern? Join me for a free webinar on Crypto and Self-Custody - The Future of Wealth and Asset Management. It's designed for financial advisors. You're welcome to attend as well. It's free. Register at DACFP.com. See you there.