The Blockchain Association Chief Policy Officer Jake Chervinsky said the U.S. Congress will ultimately set the laws in the country to govern the cryptocurrency industry and not the Securities and Exchange Commission, which this month launched a flurry of enforcement actions against digital asset companies. The SEC and other regulatory agencies are bound by this “legal reality,” he said.

See related article: Ripple gets support from Blockchain Association in XRP lawsuit against SEC

Fast facts

  • Neither the SEC nor the Commodity Futures Trading Commission “has authority to comprehensively regulate crypto,” Chervinsky said in a Twitter thread on Tuesday. 
  • Chervinsky called 2022 the “worst year in crypto history” due to the collapse of Bahamas-based crypto exchange, which he said did “massive damage” to the industry’s reputation and caused skeptics to rush in to regulate, he added.
  • Chervinsky said the ideological gap between House Republicans and Democrats has delayed debate on digital asset regulations, which has led to agencies “stretching their authority beyond recognition to ‘get things done’ without Congress, whether the law allows it or not.”
  • The policy officer called the SEC “crypto’s chief antagonist” and criticized the agency’s recent actions, calling it “regulation by enforcement.”
  • On Thursday, crypto exchange Kraken shuttered its crypto staking program and paid a US$30 million fine after the SEC said the program violated securities law. Shortly after, Paxos Trust Company stopped minting the Binance USD (BUSD) stablecoin, which has a US$16 billion collateralization, under order from the New York Department of Financial Services.
  • In response, Chervinsky suggested petitioning Congress for further action and educating it on the industry. He also called for using the courts to litigate against regulators to hold them to more strict definitions of existing laws and to help set legal precedents.
  • “Policy is made in all three branches of government, and we’ve ignored the judiciary for too long,” he said, adding he remains optimistic about the future of the crypto industry in the U.S.

See related article: Binance.US pulls out of Blockchain Association, sets up own influence lobby