Supreme Court Ruling May Interfere With SEC’s Crypto Crackdown

By Kevin • July 4, 2022 4:15 pm • Comments

SEC Chair Gary Gensler’s campaign to enforce more regulation upon the crypto industry might have more legal obstacles than previously anticipated.

The Supreme Court’s recent opinion on the West Virginia vs. EPA lawsuit had results that would likely limit or restrict the power of agencies like the SEC on things that are usually outside of Congressional control.

Crypto industry advocates are welcoming this as many have claimed that the SEC is guilty of over-regulation in recent years that has stifled innovation and growth within the crypto industry.

Trending: RippleX VP Eyes $16 TRILLION Market

As a result, further regulation may need more approvals from Congress depending on how the results of this case impacts the regulation process.

PYMNTS.com reports:

“Today’s #SCOTUS decision challenges the regulation by enforcement approach that the digital asset industry has been forced to navigate,” Perianne Boring, CEO of the Chamber of Digital Commerce, a crypto industry association, said on Twitter. “Without clear Congressional authorization, federal agencies must tread carefully.”

In a statement to CNBC, she added that the ruling “at the very least should give regulators pause in attempting to set policies that exceed their congressionally mandated roles, particularly so with emerging innovations with great economic potential.”

Specifically, the industry objects to the SEC’s ruling that virtually all cryptocurrencies are securities subject to its jurisdiction. That has led to enforcement actions that effectively shut down the initial coin offering (ICOs) that funded the growth of the industry during the first major crypto boom in 2017-2018.

It’s an argument that Gensler has been losing recently, after a bipartisan Senate bill recommended giving control of most cryptocurrencies to the Commodity Futures Trading Commission (CFTC).

Recent actions by the SEC include situations where the agency is trying to control the crypto lending industry where it had targeted firms such as  BlockFi and Coinbase.

Specifically in this case, it prevented Coinbase from getting into crypto lending in the first place and it made BlockFi pay a $100 million settlement.

Apparently, there were threats that the SEC would sue Coinbase if it did launch a lending service which was something that outraged Coinbase CEO Brian Armstrong.

FT.com concludes:

While the principle is not new, the ruling has give it more heft as a doctrine that could underpin future legal challenges against regulators.

“The Supreme Court has taken a tool away.

The boundaries of regulators’ rulemaking powers, of what constitutes a “major” issue and of Congress’s mandates are set to be determined by courts in years to come, according to experts.

But for now, “the Supreme Court is telling lower courts and certainly telling administrative agencies, ‘you better be building on bedrock when you construct economic regulatory rules,’” said Kovacic.

“And that is very conservative engineering. It really limits how high up you can build”.

Experts are speculating that the SEC is going up against both the government side as well as the retail side which might eventually be too much to handle.

Join the conversation!

We have no tolerance for comments containing violence, racism, profanity, vulgarity, doxing, or discourteous behavior. If a comment is spam, instead of replying to it please click the icon below and to the right of that comment. Thank you for partnering with us to maintain fruitful conversation.

 

Search ProCoinNews