Using the Courts for Every Encryption Problem Will Crush Innovation – Grayscale CEO

Michael Sonnenstein, CEO of Grayscale Investments, highlighted a potential negative outcome for the US economy if the Securities and Exchange Commission (SEC) continues with one approach after another to regulating the cryptocurrency industry.

during recent times interview With Fox Business, Sonnenshein expressed that the SEC can get crypto companies out of the country by constantly resorting to enforcement action.

“If every crypto-related issue needs to go to a court of law, then as a country we are crushing the innovation that is happening here,” Sonnenshein stated.

Grayscale CEO Michael Sonnenshein on Fox Business. source: Fox Business

Sonnenshein emphasized that the industry needs distinct definitions for crypto-commodities and crypto-securities, as well as clearer regulatory guidelines for stablecoins.

He believes this will prevent companies from moving out of the United States. Sonnenshein said:

“Adding more clarity to this would ensure that companies and individuals working in the crypto space do not leave the US because our regulatory environment is hostile to the asset class but instead embrace it.”

Ripple CEO Brad Garlinghouse made similar comments before Ripple’s partial victory over the Securities and Exchange Commission on July 13.

On June 17, Garlinghouse expressed that the SEC is “looking to kill” innovation and the cryptocurrency industry in the United States. He added that the Ripple lawsuit is just the beginning of many other cases.

Garlinghouse stated, “Ultimately, as our case draws to a close, for many others it is just beginning, so the fight for clarity must continue.”

Related: The SEC’s decision on Bitcoin ETFs won’t leave the Wall Street giants alone

However, Sonnenshein remains optimistic about Congress’ ongoing efforts to provide regulatory clarity for the industry.

“A lot of this legislation that this Congress can pass very well; it could give the industry the actual clarity it needs to move forward in a way that embraces crypto,” Sonnenchen stated.

On July 31, Cointelegraph reported that the House Financial Services Committee approved the Financial Innovation and Technology for the 21st Century Act by a vote of 35 to 15.

The law aims to establish the registration rules for crypto companies under the jurisdiction of the CFTC or the Securities and Exchange Commission.

While Sonnenshein is confident in the direction of Congress, he believes the SEC should shift its focus around bitcoin (BTC) exchange-traded funds (ETFs).

He explained that the SEC is evaluating the wrong criteria when deciding which Bitcoin ETF to bring to market.

“When I think about the process the SEC has to go through here, it’s really not about picking winners and losers, it’s about ensuring that all the correct disclosures are put out to investors.”

On August 11, the SEC postponed its decision on the outcome of a Bitcoin spot ETF proposed by ARK Investment Management.

Following its publication in the Federal Register, the Securities and Exchange Commission (SEC) has started a public comment period on the ARK 21Shares Bitcoin ETF.

This marks the latest delay in the regulatory decision-making process regarding approval of a spot cryptocurrency ETF in the United States.

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