U.S. Securities and Exchange Commission Commissioner Mark Uyeda has called for clear regulations for cryptocurrencies, criticizing the SEC’s current enforcement-focused approach as insufficient to safeguard legal precedent and market stability.
In comments on November 6, SEC Commissioner Mark Uyeda emphasized the urgent need for the SEC to shift toward proposing clear rules or guidance for the cryptocurrency market, rather than relying primarily on enforcement actions. According to Uedathis shift could provide the emerging industry with the legal clarity it needs.
Speaking on the issue in London, Uyeda expressed frustration with the SEC’s reluctance to help shape cryptocurrency regulations, noting that the current enforcement-led strategy could lead to protracted legal battles before any clear precedent is established. He believes this approach could take years as cases slowly work their way through the court system and into appeals.
Uyeda’s comments come amid growing activity from the U.S. Securities and Exchange Commission (SEC) in the cryptocurrency space, with high-profile cases involving major players such as Binance and Coinbase. Uyeda’s comments follow those of SEC Chairman Gary Gensler, who argued that most cryptocurrencies, with the exception of Bitcoin (BTC), are securities and therefore companies that trade with them should report to the agency register.
The cases force judges to decipher how existing laws apply to the new cryptocurrency industry — which claims it struggles to remain compliant and competitive without a transparent regulatory framework in the United States
In doing so, the SEC often invokes the Howey test, derived from a 1946 Supreme Court case, to determine whether a transaction qualifies as an investment contract and therefore is subject to securities regulation.
Uyeda acknowledged the complexities inherent in defining what constitutes a security and criticized the SEC’s current approach as being obscure and unpredictable, comparing it to the “classification hat” in the Harry Potter series.
He called for action, urging a clearly defined regulatory environment that would allow participants to navigate the market without fear of inadvertent violations due to vague or as yet unexplained rules.