Amid escalating legal skirmishes between the U.S. Securities and Exchange Commission (SEC) and crypto firms, Ethereum co-founder and CEO of Consensys Joseph Lubin remains hopeful.
“I anticipate that, as with previous technologies like the internet, the web and cryptography, clear heads will prevail,” Lubin told CNBC’s Capital Connection program today, predicting a positive outcome in the SEC’s regulatory tussles with the crypto industry.
“America will see that decentralized protocols, blockchain and cryptocurrency are aligned with the philosophies of the U.S. And I think much of the rest of the world will follow suit,” Lubin added.
SEC vs. crypto
Major crypto players like Binance, Coinbase and Ripple are currently locked in ongoing legal battles with the SEC over alleged securities law violations. The core debate hinges on the classification of crypto tokens, with SEC Chair Gary Gensler claiming that most crypto tokens are securities and need to register with the agency.
However, Lubin challenged this perspective, saying Gensler can't just label tokens as securities — it needs to be demonstrated.
“A lot of countries take some of their lead from the U.S.,” Lubin warned. “The U.S. has a lot of influence on the world through financial intermediaries and other intermediaries, and decentralized protocol technology is about right sizing and eliminating intermediaries in many ways. The U.S. is also all about free markets, capitalism and free speech,” he said.
In a prior interview with CNBC in March, Lubin had compared ether to commodities like oil. Reiterating this stance today, he told CNBC, “I remain resolute in my belief that ether is a commodity."
The ripple effect
Given the regulatory uncertainty, U.S. crypto firms like Galaxy Digital have warned they planned to move some business out of the country.
Ripple’s partial victory against the SEC in July may have altered sentiment on moving out of the U.S., with Judge Analisa Torres’ ruling that XRP was not a security when sold to retail investors on the secondary market and would only be a security when sold as part of an investment contract to institutional investors.
That ruling, alongside Grayscale’s victory against the agency regarding conversion of its GBTC fund into a spot bitcoin ETF last month, has seemingly done little to change Gensler’s stance on the industry, however.
"This crypto space that much of it, without prejudging any one token, much of it is under the securities laws, but unfortunately, much of it is also non-compliant," Gensler said at a conference yesterday, adding that millions of investors have been hurt by crypto and the industry could spill over to impact the broader financial system.
The SEC also doubled up its focus on the NFT sector yesterday, charging the Stoner Cats NFT television show with conducting an unregistered offering after a similar action against the podcast Impact Theory last month.
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