SEC Director of Enforcement Gurbir Grewal Slams Crypto Industry, Cites “Significant Non-Compliance”
Gurbir Grewal, the Director of the United States Securities and Exchange Commission (SEC)’s Division of Enforcement, took aim at the crypto sector for its “significant non-compliance” regarding crypto regulations Wednesday morning during remarks at Practicing Law Institute’s annual SEC Speaks event.
Grewal began his speech by emphasizing that the SEC decides whether or not cryptocurrencies classify as a security based on the Howey test; a four pronged framework developed by the U.S. Supreme Court designed to parcel out what products may count as “investment contracts,” a.k.a. securities.
While Grewal noted that not every crypto product can be designated as a security, he emphasized that the Howey test was the federal agency’s standard for evaluating cryptocurrencies as well as more traditional “financial offerings.”
“Over the past decade, we have confronted significant non-compliance and many, many creative attempts by market participants to avoid our jurisdiction, with some claiming that we are making it up as we go or regulating by enforcement, and others arguing that we are recklessly exceeding our authorities,” Grewal said.
“We’ve been accused of picking winners and losers, stifling innovation, and driving crypto businesses to more favorable, foreign jurisdictions, wherever they may be,” Grewal continued. “A decade’s worth of verbal gymnastics that are just a backhanded way of saying, ‘we want a different set of rules than those that apply to everyone else.’
Grewal’s comments come amidst public scrutiny of the SEC’s regulation-by-enforcement approach which has seen several crypto businesses such as Ripple, Kraken and Coinbase, faced with hefty litigation.
Critics of the federal agency argue that the SEC has
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