Grayscale CEO Slams SEC for Bitcoin’s Delayed Adoption
- Grayscale CEO Michael Sonnenshein stated that the SEC is responsible for the slow and delayed growth of Bitcoin (BTC).
- The SEC was “late to the game” when it comes to the regulation of crypto, said Sonnenshein, which led to the collapse of FTX.
- Sonnenshein added that the SEC’s “one-dimensional approach of regulation by enforcement” is hurting the crypto industry.
- The agency’s regulation tactics have pushed crypto businesses out of the US “with less protection and oversight.”
Bitcoin (BTC), the world’s biggest cryptocurrency, hasn’t been much bullish lately as the adoption of the blockchain-based currency has been slowed down due to multiple reasons ranging from collapse of crypto exchange FTX to regulatory uncertainty in the space. Interestingly, the CEO of Grayscale, an American digital currency asset management company, Michael Sonnenshein, believes that the United States Securities and Exchange Commission (SEC) is to blame for the delayed growth of BTC.
According to a letter published in the Wall Street Journal (WSJ) on January 23, the Grayscale executive stated that the securities regulator was “late to the game” when it comes to the regulation of cryptocurrencies, blockchain, and DeFi-focused companies, which resulted in the collapse of the former multi-billion dollar crypto exchange FTX under the leadership of Sam Bankman-Fried (SBF).
“‘Late’ doesn’t capture what transpired here. The problem is the Securities and Exchange Commission’s one-dimensional approach of regulation by enforcement,” Sonnenshein added.
Moreover, the CEO of Grayscale also stated that the SEC “should certainly try to eliminate bad actors,” but it shouldn’t hinder “efforts to develop appropriate regulation.”
Interestingly, there has been a petition signed by 18,873 people that calls for the resignation of SEC Chair Gary Gensler for his alleged involvement in the obstruction of justice involving Citadel Securities’ conduct. The petition claims that the regulator did nothing despite Citadel’s standing as a market maker with dubious business practices.
As per the Grayscale executive, it was the silence kept by the SEC that “prevented Bitcoin’s advancement into the U.S. regulatory perimeter” and, as a result, hindered the leading cryptocurrency’s adoption in the institutional and retail spaces. Sonnenshein added that as a result of the SEC’s practices, American crypto businesses had to move out of the country “with less protection and oversight.”
“We are seeing the consequences of the SEC’s priorities play out in real-time—at the expense of U.S. investors,” Sonnenshein said.
Another important event to note here is the ongoing legal battle between the SEC and Grayscale. The latter claims that the regulator “arbitrarily denied” the firm’s request to convert its GBTC shares to a spot Bitcoin ETF. The agency recently submitted its first legal brief after Sonnenshein’s firm submitted its first one in the month of October.
The SEC stated in the brief that its rejection of Grayscale’s request was “reasonable, reasonably explained, and supported by substantial evidence.” The regulator stated that the company’s “arguments fail to grapple with the Commission’s core conclusion that the fundamental differences in the ability to detect and deter fraud and manipulation reasonably support treating the two products differently.”
“In approving Bitcoin futures-based ETFs but not spot Bitcoin ETFs, the SEC has failed to abide by the Administrative Procedure Act (APA) and Securities Exchange Act of 1934 (Exchange Act),” stated Grayscale.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
