A member of a U.S. Securities and Exchange Commission (SEC) advisory panel has called on the agency to ask for the public’s help on how to regulate digital assets.
In a seven-page letter recently emailed to the regulator, SEC Investor Advisory Committee member J.W. Verret said inviting comments on digital assets could serve as a “genesis block” for the SEC to reform its regulations on digital currency. The term refers to the first block in a blockchain.
Verret, an associate professor of blockchain securities and corporate law at George Mason University’s Antonin Scalia School, acknowledged that he is an investor in several cryptocurrencies, including bitcoin and Ether.
“Under the SEC’s strategically ambiguous interpretation of the Howey test regarding classification of investment contracts, I cannot be certain that the SEC will not in the future target one of my token holdings, under the guise of the Commission’s investor protection mission, in a manner that would ultimately cause me significant losses as a property owner,” he said, referring to is a test created by the Supreme Court in the 1940s to determine whether certain transactions qualify as “investment contracts” and if so, would be subject to U.S. securities laws.
“As a property owner in the class of individuals the SEC often purports to protect, I would submit that I fear the SEC may significantly harm me if it continues on its current course,” he wrote.
His appeal comes as SEC Chairman Gary Gensler told reporters a virtual press conference Wednesday (Jan. 19) that crypto exchanges will be a chief focus on his agency’s crackdown on digital assets in 2022.
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“I’ve asked staff to look at every way to get these platforms inside the investor protection remit,” Gensler said. “If the trading platforms don’t come into the regulated space, it’d be another year of the public being vulnerable.”
