SEC has taken a ‘too broad’ view of crypto, says ex-commissioner
Troy Paredes, who served as commissioner of the United States Securities and Exchange Commission (SEC) from 2008 to 2013, outlined what digital assets the regulator considers securities.
Speaking at the TokenizeThis 2024 conference in Miami on May 9, Paredes seemed to suggest that SEC Chairman Gary Gensler was clear about the commission's view of how security was embedded in the Howey test. However, there is still a “legal question” that the SEC needs to address on digital assets.
“I mean if it's not a security, it's outside the scope of the federal securities laws, it's within the jurisdiction of the SEC,” Paredes said. “The commission, in my opinion, took a very broad view of what safety means in the Hawaii test.”
The former commissioner added that many inside and outside the SEC seemed to be focused on labeling certain tokens as securities, but were not addressing how to “adapt the regulatory regime” for digital assets. He added that there are “a lot of uncertainties” among companies trying to comply with regulatory requirements.
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Many criticized the SEC's “regulation by enforcement” approach to crypto companies offering tokens or crypto services to US residents. The commission has filed charges against Binance, Kraken and Ripple and may be preparing to take enforcement action against Robinhood after the Welsh notice.
The SEC's actions have prompted a response from many lawmakers who want to limit the Commission's authority over digital assets. On May 8, a majority of the US House of Representatives voted to overturn the SEC Staff Accounting Bulletin on banks holding customers' digital assets. President Joe Biden has said he plans to veto the bill.
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