U.S. is Urging The SEC to Have Proper Check And Balance Against Major Cryptocurrency Exchanges
On Jul 25, 2022
The United States is urging the SEC to take regulatory action against major cryptocurrency exchanges that have listed XRP, according to a recent letter from the Department of Justice. While it’s unclear what specific actions the SEC will take, this development is sure to cause chaos in the already volatile cryptocurrency market.
U.S. Congressman Brad Sherman believes that the SEC should take action against the exchanges for allegedly violating federal securities laws. He said that the SEC should investigate whether the exchanges knew or should have known that XRP was security and whether they properly disclosed this to their customers. He also called on the SEC to bring enforcement actions against the exchanges if it finds that they violated the law. The agency has already brought enforcement actions against a number of ICOs and exchanges, and it is expected to take further action in the coming months.
Sherman questioned SEC Director of Enforcement Gurbir Grewal regarding the SEC’s investigation of Tether and XRP. Grewal was asked whether the SEC has “ruled out” the possibility that buying Tether and XRP is safe, and Grewal replied that the agency had not ruled anything out at this point. The SEC’s investigation into XRP and Tether is ongoing, and no decisions have been made regarding whether or not the tokens are securities.
A hearing is held to examine the U.S. Securities and Exchange Commission’s (SEC) efforts to address emerging risks and protect investors. The SEC has come under fire in recent years for its handling of risk culture at financial firms and its role in the financial crisis. The SEC has made significant reforms since the financial crisis, and it is committed to continuing to work to improve risk management at financial firms and protect investors.
Sherman added that it’s way much easier to go after small fish than a big one, but operating big fish leads to many, many tens of thousands of transactions with major exchanges. The CEO of a large crypto exchange spoke about the challenges of listing new assets on his platform and explained that it is often more difficult to list smaller projects. The size of the project is a major factor that the exchange takes into account. However, for a large project like XRP, there are many more options available. Listing a small token can lead to tension with exchanges because they may feel that they are taking on all the risk. It is often easier to list a large token because there are already many wallets and exchanges supporting it.
Congressman Tom Emmer (R-MN) criticized the SEC’s approach that it seems clear to everyone that the SEC is not regulating in good faith,” he said. The congressman’s criticism comes as the SEC has been scrutinized for its handling of the crypto industry. In particular, the agency has been critiqued for its decision to classify some digital tokens as securities.