Crypto companies have been left in limbo after the U.S. Securities and Exchange Commission (SEC) refused to provide guidance on how to register and become compliant. This was revealed in the latest industry testimony in the U.S. House of Representatives this week. SEC Chair Gary Gensler has repeatedly invited firms operating without the agency’s approval and oversight to come in and register, but this has not been enough. Dan Gallagher, a former SEC commissioner, said that despite the staff’s willingness to help, Robinhood Markets’ efforts to register as a special-purpose broker for digital assets were summarily told in March that that process was over and we would not see any fruits of that effort. Coinbase’s top lawyer, Paul Grewal, echoed this sentiment, saying that after months of discussion, the SEC simply dismissed their attempts to register. The regulator’s final sticking point was the lack of registration and disclosures from issuers of tokens that trade on the platform.
Sen. Cynthia Lummis (R-Wyo.) tweeted that the SEC has failed to provide a path for digital asset exchanges to register. However, the Financial Industry Regulatory Authority (FINRA) has approved digital-assets broker-dealers to trade crypto securities. Despite this, the companies trying to become compliant crypto firms have yet to demonstrate a fully formed business model.
SEC Chair Gary Gensler has warned that the industry must fix its compliance problems or it could collapse like a house of cards. Coinbase CEO Brian Armstrong said in a CNBC interview on Wednesday that we have to go to court and really see, otherwise this industry is not going to exist in the United States.