The Securities and Exchange Commission regulating how cryptocurrencies are registered, according to Mark Cuban, will be nothing short of a “nightmare.”
The billionaire star of “Shark Tank” and owner of the Dallas Mavericks tweeted that sentiment over the weekend, following a tweet from Senator Patrick Toomey (R-PA) that criticized the SEC.
Toomey called out what he described as a “regulation-by-enforcement approach” toward the crypto industry by the agency, which recently filed civil and criminal charges against three individuals, including a former Coinbase employee, accused of illegal insider trading.
Today we announced insider trading charges against a former Coinbase product manager, his brother, and his friend for perpetrating a scheme to trade ahead of multiple announcements regarding certain crypto assets that would be made available for trading on the Coinbase platform.
— U.S. Securities and Exchange Commission (@SECGov) July 21, 2022
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In court filings, the SEC claimed at least nine cryptocurrencies considered unregistered securities were being traded on Coinbase’s exchange. Toomey believes it would’ve been better if the SEC clarified what entails a digital asset being classified as a security prior to charging the individuals.
“Yesterday’s enforcement action is the perfect example of the SEC having a clear opinion on how and why certain tokens classify as securities,” he said. “Yet the SEC failed to disclose their view before launching an enforcement action.”
But the SEC’s regulation-by-enforcement approach to digital assets poses a serious challenge for any well-meaning innovator who’s striving to comply with existing laws and regulations. Providing regulatory clarity prior to enforcement would benefit regulators and investors alike.
The senator added that the SEC’s actions will make it challenging for investors and innovators to comply with laws and regulations due to a lack of transparency or clarity.
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“Think this is bad? Wait till you see what they come up with for registration of tokens,” Cuban said. “That’s the nightmare that’s waiting for the crypto industry.”
Think this is bad? Wait till you see what they come up with for registration of tokens. That's the nightmare that's waiting for the crypto industry. How else do you keep thousands of lawyers employed and create reasons to ask for more taxpayer money? https://t.co/eoDAiyDxlRhttps://t.co/mjr9LxnDZB
He also linked to a video of him seeking guidance from the SEC on insider trading rules back in 2014, in which he expressed frustration over being directed to rules for filing a no-action letter that dated back to 1980, saying they were unclear.
“This is certainly not going to help any normal individual who’s thinking about buying stocks in the market,” he said in the video. “It’s not going to help them understand insider trading, and it’s not going to give them comfort that they're doing all they can to not break the law.”
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