Former CFTC Commissioner Brian Quintenz, now the head of policy at venture capital firm Andreessen Horowitz, is criticizing the U.S. Securities and Exchange Commission (SEC) for suing cryptocurrency companies for allegedly violating securities laws, saying the SEC’s litigation is not helping to protect consumers or provide clarity to the crypto industry. He warned that if the SEC continues on its current path, innovators will move out of the country into jurisdictions that have clearer crypto regulations.
“The SEC’s actions today continue the pattern of an irresponsible regulation-by-enforcement approach that hurts entrepreneurs, investors and consumers while threatening to stifle innovation and drive responsible companies away from the U.S.,” Quintenz wrote in a June 6 Twitter post.
The SEC filed lawsuits against Binance and Coinbase last week, the largest crypto exchanges in the world and in the U.S., respectively. The lawsuits allege that Coinbase should have registered as an exchange with the SEC and accuse Binance of offering unregistered securities and permitting U.S. customers to use the global Binance platform, instead of restricting them to its U.S.-based platform, according to the SEC website.
While the U.S. is cracking down on crypto companies, Hong Kong is opening its doors to them, with Hong Kong legislative council member Johnny Ng inviting Coinbase and other companies to apply for a crypto trading platform license, which Hong Kong has made available as of June 1, CoinDesk reported.
“I hereby offer an invitation to welcome all global virtual asset trading operators including @coinbase to come to HK for application of official trading platforms and further development plans,” Ng said in a tweet.
Tom Duff-Gordon, Coinbase's vice president of international policy, said that while the company is "really excited to be expanding overseas," they are not giving up on their U.S. operations.
“The easiest thing for us to do would be to cut and run but that's not what we're doing,” Duff-Gordon said in an interview. “We want to represent the industry to stand up and to fight for regulatory clarity in the U.S.”
Earlier this year, Sen. Cynthia Lummis (R-WY) highlighted the urgent need for comprehensive regulation for the crypto industry, citing the fact that countries such as the UK, Switzerland and Australia are making progress on implementing crypto regulations. She warned that if the U.S. does not provide regulatory certainty, members of the crypto industry will leave the country, rather than “waking up, finding out you're subject to an enforcement action by the SEC, when you thought you were in full compliance with U.S. law."
In the wake of the SEC's lawsuits against Binance and Coinbase, Andreessen Horowitz, which has backed tech companies including Airbnb and Coinbase, announced that it is opening an office in London, citing the promising crypto environment in the UK, CNBC reported. Quintenz told CNBC in an interview, "We have seen a wonderful openness to the promise of the technology across parties, as well as a strong interest in whatever regulatory regime comes online that focuses on consumer protection and fostering innovation. Frankly, I don’t think this current administration in (the) United States is doing either — it’s a moment in a time when the U.K. acts nimbly and quickly, but robustly.”
Binance responded to the lawsuit in a blog post, saying the company is “disappointed” that the SEC has chosen this path, especially at a time when the industry is looking for more regulatory clarity.
"Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry," the post said.