The Web3 entities and the regulatory bodies that oversee them are at the lowest point of their relationship.
For years, crypto exchanges and the Securities and Exchange Commission (SEC) have argued that digital assets Cryptocurrencies and NFTs constitute securitiesIn 2022, that gap looks even wider as the friction over this fundamental disagreement heats up.
Agency opened in March Researching various NFT marketplaces To buy or sell potential securities. In July, we published a similar study Popular virtual currency exchange Coinbase For the agency’s previous review of Coinbase’s listing process and for adding more tokens to the platform, despite the company’s repeated claims. not a securities business.
The Web3 companies are understandably nervous and their frustration is palpable. Very divisive is the agency’s enforcement focus on securities issues. SEC Commissioner Hester Peirce She recently shared her dissent on the issue, saying that what regulators are doing is “not a sound process.”
How the SEC handles securities matters is very important to the cryptocurrency world. Legally, if a court determines that a digital asset is a security, it is dead in Web3 waters, as no NFT platform or cryptocurrency exchange currently holds a stock exchange license.
The industry rarely experiences a schism with near-total disagreements between companies and the regulators tasked with overseeing them. However, according to some, this problem can be exacerbated by optics and politics.
“If there is a trillion-dollar market, the SEC chairman says that once you step into that market, you will be completely consumed and put in the middle of a food war between traditional financial services and cryptocurrency companies. You have to know that it’s possible,” Davis explained.Joe Hall, a partner at Polk Law Firm and a cryptocurrency legal expert, said in a recent interview: forbes.
“It’s easy to criticize the SEC from the outside,” Hall continued. “But I know exactly why they are doing it. It is much easier to take enforcement action against
The Web3 company continues to conduct day-to-day operations despite concerns that it may be subject to the next SEC scrutiny. But one thing is certain: how security issues are resolved will have a big impact on the future of Web3.
“How this unfolds in the coming months will shape the future of much of the existing cryptocurrency industry,” said Jay Masari, chief legal officer of blockchain startup LightSpark. ‘ said. forbes report.
Regardless, the tension and ambiguity that characterize the current regulatory landscape won’t last forever. Legally, Web3 should be stable at some point, but that point may come. late rather than early.