GURBIR GREWAL REFLECTED ON THE CRYPTO INDUSTRY’S COMPLIANCE EFFORTS.

Gurbir Grewal, in a recent speech at the annual SEC Speaks conference held by the U.S. Securities and Exchange Commission (SEC), highlighted the current cryptocurrency industry compliance enforcement procedures. He expressed his respect within the field at a two-day event organized by the Practical Law Society. The subject of his speech, which lasted approximately 15 minutes, highlighted the increasingly innovative exploitation of other market participants to circumvent the SEC’s regulatory system.

Grewal’s opinion comes as regulators are taking a tougher stance on cryptocurrencies, as the industry and regulators are increasingly at odds. Such actions on the part of the latter often lead to criticism of the SEC. The SEC is frequently accused of engaging in so-called “regulation by enforcement,” in which the SEC dents regulation through the filing of enforcement actions rather than issuing clear orders. Decide on the rules in advance. This issue is a central element of an ongoing dispute between various players in the regulatory realm over whether cryptocurrencies should be regulated like securities.

Howey Test and Cryptocurrency Regulation 

At the center of his analysis, Grewal discussed the Howie Test, a standard formed from a 1946 Supreme Court case. This test, currently used by the SEC, classifies whether a particular asset is considered an investment and therefore classified as a security. Grewal reiterated that no matter the intent of the proposal or the expectation of profit, the Howie test should be applied as a standard, otherwise, other frameworks proposed by the crypto industry will not hold. confirmed.

This stance echoes the point made by SEC Chairman Gary Gensler, who has always held firm to the view that most cryptocurrencies need to be regulated as securities. The question of which court should interpret led to a legal challenge, with the company, along with Coinbase, drawing similarities between crypto assets and collectibles and objecting to labeling crypto assets as securities. However, Grewal’s statement makes it clear that he has nothing to do with these comparative analyses because the SEC is so intent on applying the Howie test to crypto assets as a primary evaluation factor. exposed under.

Pursuing clarity and compliance

Grewal’s criticism not only covers regulatory issues such as the scope of testing, but also focuses on issues of integrity in the crypto industry. He highlighted both the violations committed in the market and the delusional and deliberate maneuvers undertaken to circumvent the SEC’s oversight role. The attitude of these individuals provides evidence of a misunderstanding or complete indifference to the legal context of the American market.

In contrast to such criticism, Grewal acknowledged that the SEC is an enforcement agency without a regulatory framework and that the SEC has been accused of overstepping its authority. He provided information that his opinion is not related to the official position of the institution, but there is still a need to address this issue to strengthen compliance and achieve clear rules and regulations within the cryptocurrency industry. He emphasized that this needs to be addressed.

The SEC’s continued dialogue with policymakers will establish the foundation for how virtual currencies will be managed in the future. As industry requirements grow over time, clear and consistent guidelines play an increasingly important role. Among the topics discussed by Mr. Grewal at the SEC Speaks event were the challenges and complexities of establishing a regulatory environment that consistently supports the future development of markets, and the Howey Test provides a vehicle for such learning. There was one.