SEC Registration Issues in the United States: Why Paradigm Thinks the Current Policy is Inappropriate

According to reports, Web3 venture capital firm Paradigm published a policy article today on SEC registration issues in the United States. The article states that US SEC Chairman Gary Gensler “attempted to forcibly include encrypted assets that may not even constitute ‘securities’ in an inappropriate disclosure framework, which is a bad policy.” The agency pointed out that the SEC failed to provide users and investors of encrypted assets with the information they needed, and also denied the SEC’s claim that the regulatory agency provided a feasible compliance path for crypto entrepreneurs. Paradigm stated that the current information disclosure policy was formulated in the 1930s long before the emergence of the internet, and the current policy is “tailored for centralized companies issuing securities,” while the crypto market is fundamentally different. The institution added that securities provide holders with legal rights over centralized entities, however, most cryptocurrencies do not have “legal rights” and only have “technical capabilities in the protocol”. （Cointelegraph）

Paradigm: The US SEC’s attempt to regulate encryption is a “bad policy”

The current SEC registration policy has been a source of controversy in the US cryptocurrency market, with many crypto entrepreneurs expressing frustration regarding the feasibility of compliance. In this article, we will explore the policy issues surrounding SEC registration in the US and examine why crypto investment firm Paradigm believes the current disclosure policy is inappropriate for crypto assets.

The Lack of Transparent Information

One of the key issues identified by Paradigm is the lack of transparency in the SEC’s information disclosure policy. The regulatory agency has failed to provide users and investors of encrypted assets with the necessary information required to make informed investment decisions. The lack of transparency has created confusion in the market and discouraged investment in crypto assets.

Gary Gensler’s Attempt to Forcefully Include Encrypted Assets

Another contentious issue arising from the SEC’s registration policy is the attempt by SEC Chairman Gary Gensler to forcibly include encrypted assets in an inappropriate disclosure framework. This has led to criticism that the agency is attempting to regulate the crypto market with a one-size-fits-all policy, which is not suitable for the evolving nature of the crypto market.

Inadequate Compliance Path

The SEC has claimed that it provides a feasible compliance path for crypto entrepreneurs. However, Paradigm has refuted this claim, arguing that the current policy was formulated in the 1930s well before the emergence of the internet. The current policy is tailored for centralized companies issuing securities, which is fundamentally different from the crypto market.

Legal Rights vs Technical Capabilities

Another notable issue highlighted by Paradigm is the difference between legal rights and technical capabilities in the crypto market. While securities provide holders with legal rights over centralized entities, most cryptocurrencies do not have legal rights and only have technical capabilities in the protocol. The current disclosure policy does not account for this fundamental difference, which is another reason why the policy is inappropriate for the crypto market.

Conclusion

In conclusion, the current SEC registration policy is not appropriate for the crypto market according to Paradigm, due to the lack of transparent information, the attempt to include encrypted assets in an inappropriate disclosure framework, the inadequate compliance path and the difference between legal rights and technical capabilities in the crypto market. The SEC needs to review and update its policies to align with the decentralized and evolving nature of the crypto market.

FAQs

1. What is the SEC disclosure policy?
The SEC disclosure policy is a set of rules and regulations regarding the disclosure of information by companies issuing securities.
2. What is the current policy’s issue?
The current policy’s issue according to Paradigm is that it is inappropriate for the crypto market as it was formulated long before the emergence of the internet.
3. How can the SEC registration policy be improved?
The SEC can improve its registration policy by introducing a separate framework for the crypto market that takes into account the decentralized and evolving nature of the crypto market.