In a striking rebuke of the U.S. Securities and Exchange Commission's (SEC) approach to cryptocurrency regulation, SEC Commissioner Mark Uyeda publicly criticized the agency's handling of the industry, calling it a "disaster" during a Fox Business panel on October 10. Uyeda's remarks reflect growing internal dissent over how the SEC, under the leadership of Chair Gary Gensler, has enforced crypto policy without providing the much-needed clarity the sector requires.
"Our policies and our approach over the last several years have been just really a disaster for the whole industry," Uyeda said, emphasizing the disconnect between enforcement and guidance. According to Uyeda, the SEC has taken a "regulation by enforcement" approach, leaving crypto firms in a state of uncertainty.
Regulatory Confusion and Lawsuits
Uyeda's remarks came just a day after crypto exchange Crypto.com sued the SEC, challenging a Wells Notice—a formal warning of potential enforcement action—issued by the regulator. The lawsuit claims that the SEC is overstepping its authority by broadly classifying nearly all cryptocurrencies as securities, a view that has been hotly contested within the crypto industry.
Critics argue that the SEC's rules are ill-suited to the unique nature of digital assets and that its approach lacks the flexibility necessary to foster innovation. Uyeda echoed these concerns, stressing the importance of establishing clear, formal guidelines to help the industry navigate securities laws.
"We need to lay out some clear guidance and interpretations on what falls within and what falls outside the securities laws," Uyeda said, highlighting the agency's failure to provide consistent direction. He also pointed out that the courts, rather than the SEC, have been left to define key aspects of crypto regulation, leading to varied rulings and further confusion.
Diverging Views within the SEC
Uyeda's comments underscore a growing divide within the SEC. Along with fellow Commissioner Hester Peirce, Uyeda has been vocal about the need for more progressive and transparent policies surrounding digital assets. However, the agency remains largely driven by Gensler's vision, which Uyeda suggested has contributed to the current state of uncertainty.
"Within the agency, our agenda is directed by the Chairman Gary Gensler. The staff all follow his lead," Uyeda remarked, stopping short of speculating on Gensler's motivations but acknowledging the Chairman's strong influence over the SEC's direction.
As the crypto industry continues to expand, the SEC's regulatory approach remains a key point of contention. Whether the agency will heed calls for clearer guidelines remains to be seen, but Uyeda's sharp critique highlights an urgent need for a more balanced and transparent regulatory framework.
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