Coinbase’s Chief Legal Officer, Paul Grewal, and Ripple’s CLO, Stuart Alderoty, have criticized the SEC for using the term “crypto asset security.” They claim that this term is ambiguous and has no legal basis in any U.S. law or regulations.
This criticism comes at a time when SEC Chair Gary Gensler and all five commissioners are set to appear before the House Financial Services Committee, the first full commission appearance since 2019.
On his Twitter, Grewal noted that the SEC has been rather incongruous in its approach to categorizing tokens as securities. He said this during a congressional hearing where Rep. Ritchie Torres also raised similar sentiments pointing out that the term ‘crypto asset security’ is not well defined in legal systems.
Alderoty stood in support of Grewal’s position, noting that the term has been problematic for the SEC in the past, particularly after the agency admitted to using it deceptively in a complaint against Binance. He said that such inconsistencies erode the SEC’s credibility in court.
While the SEC has come under pressure over its regulatory approach, some of the most significant critics have been lawmakers such as House Majority Whip Tom Emmer. In the upcoming testimony, Gensler might be grilled on more than just the crypto regulation but also the case of hiring malpractice at the SEC.
This growing debate indicates a significant event in the future of cryptocurrency regulation in the U.S.
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