A senior fellow at the Libertarian Think Tank Competitive Enterprise Institute has criticizd SEC’s approach to regulating cryptocurrencies. He delivered his comments in a report published on April 11. The report is called “Cryptocurrency and the SEC’s Limitless Power Grab: Why Speculative Consumer Goods Are Not ‘Securities,’”. Berlau claims that distributed ledger technology is transformative and its progress has been hindered by burdensom regulations.
He further stated that among all regulatory agencies, cryptocurrencies are at a larger threat from Securities and Exchange Commission. Furthermore, he argued that the government’s interference on the technology prevents further experimentation. If the scenario continues as such, per Berlau it could threaten the functionining of blockchain and could also harm retail investors.
“Deeming cryptocurrency as a ‘security’ could put cryptocurrency out of the reach of middle-class investors because of the same red tape — both from SEC regulations and from financial regulation laws such as the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010 — that has hindered small investors’ access to stock in early stage growth companies.”
The report also criticized the Howey test used by the SEC and Supreme Court to define whether transactions qualify as “investment contracts.” Berlau stated that
“The test gave the agency “the power to regulate many cryptocurrencies as securities,” thus allowing it to take more drastic measures toward cryptocurrencies than other investments.”
Earlier in April, the SEC released a guidance document dubbed “Framework for ‘Investment Contract’ Analysis of Digital Assets”. The document was released to help market participants decide on whether a digital asset is deemed to be an investment contract, and therefore a security. Also, earlier this week, U.S. lawmakers reintroduced the Token Taxonomy Act in the House of Representatives.
If in case the bill becomes a law, it would exclude digital currencies from federal securities laws. Expressing his sentiments on the act, Berlau stated that it “appears to stretch the Howey Test even further and broadens greatly what products could be considered securities.”
In another news reported by CoinMarketFeed, the Lithuanian finance ministry wants to bring more legal certainty to the operation of companies relating to cryptocurrency exchanges, crypto wallet operators, as well as initial coin offerings (ICOs).
Per the report, the ministry seeks to bring legal certainty to the operational scope of companies dealing in cryptocurrencies, crypto wallet operators as well as initial coin offerings (ICOs). Furthermore, the authority will put in measures against money laundering and terrorism financing to ensure consumer protection. Per the new proposed amendments, firms dealing in cryptocurrencies will need to be registered with the Center of Registers in order to operate as legal entities.