Big Battles Loom in SEC’s War on Crypto

livemint.com:

WASHINGTON—It is the Securities and Exchange Commission’s forever war. The SEC in 2024 will mark the seventh year of its campaign to regulate cryptocurrencies through enforcement, with no end in sight. The regulator is waging several major court battles that could determine whether rules written for Wall Street apply to digital assets.

But a winner is unlikely to emerge in 2024 and neither is certainty about who regulates crypto. “When you do regulation by enforcement, this is how long it takes," said Jan Folena, a partner at Stradley Ronon who earlier tried major cases for the SEC. “There is no shortcutting it.

You can’t go to the court and say, ‘We need an answer fast because nobody else is doing anything.’" In the most closely watched case, Coinbase, the largest U.S. crypto exchange, will ask a federal judge in January to dismiss the SEC’s lawsuit alleging the company violates fundamental investor-protection laws. Courts typically don’t toss the SEC’s claims at an early stage, so the litigation is likely to last into 2025.

The SEC first warned it could police many cryptocurrency deals in 2017, when it issued a report outlining its legal authority under its then-Chairman Jay Clayton. The SEC under Clayton went after companies that sold digital coins for fundraising purposes. Since then, multiple federal agencies have played a role in policing crypto trading.

But the SEC has asserted the broadest claim over the $1.7 trillion market. Chair Gary Gensler, who succeeded Clayton in 2021, says almost all crypto products are securities, which his agency regulates. Shortly after taking over, Gensler directed a new strategy for the agency’s struggle to police crypto.