SEC Commissioners Criticize Agency’s Crypto Enforcement Strategy Post ShapeShift Settlement

The U.S. Securities and Exchange Commission (SEC) has recently faced criticism from Commissioners Hester Peirce and Mark Uyeda regarding the agency’s unclear cryptocurrency enforcement policies, particularly in light of a settlement with ShapeShift. The ShapeShift case, according to the commissioners, sheds light on broader issues within the SEC’s approach to digital assets.

ShapeShift, a crypto platform based in Denver, Colorado, recently reached a $275,000 settlement with the SEC following allegations of offering unregistered securities to its customers. The SEC identified at least 79 crypto assets listed by ShapeShift, some of which were classified as unregistered securities based on the Howey Test.

As part of the settlement, ShapeShift agreed to pay the civil penalty within two weeks and abide by a cease-and-desist order to prevent future violations. However, Peirce and Uyeda criticized the SEC’s handling of the case, pointing out the lack of clarity in determining which specific assets were considered investment contracts and the absence of rationale for this classification.

The commissioners highlighted the perceived opacity and arbitrariness of the SEC’s standards, noting that ShapeShift was being penalized for alleged violations without a clear explanation or evidence of harm caused. They argued that such enforcement actions could stifle innovation and entrepreneurship in the crypto asset markets rather than protect investors.

In conclusion, Peirce and Uyeda expressed their dissent with the SEC’s approach, emphasizing the need for clearer guidelines and a more supportive environment for crypto asset markets to thrive. They called for a reevaluation of the current regulatory landscape to foster innovation while ensuring investor protection.