The U.S. Securities and Exchange Commission (SEC) will not be offering amnesty to cryptocurrency companies that self-report their violations of securities laws, according to the agency’s enforcement director.
“Our message to them is not, ‘Register your product and we’ll just ignore the billions you have under management in this crypto lending product and your violations of the securities laws,’” Gurbir Grewal declared. With his first public statement on crypto after being hired in July last year, the enforcement director aimed to set a precedent for companies that have persistently complained of a lack of compliance standards.
While offering some clarification, the announcement has also dashed the hopes of those in the industry who had hoped the SEC would incentivize self-reporting through an amnesty, according to attorneys. While Grewal has taken this off the table, he has acknowledged that penalties may be diminished through cooperation.
“Our message is that we’ll view their conduct more favorably if they come in – such as what the remedies will look like, including penalties, and finding a path to complying with the securities laws,” Grewal said. “That’s the benefit entities get from self-reporting violations and working with us.”
SEC targeting crypto platforms
While many had hoped that the regulatory agency would be more cooperative with the accession of Gary Gensler as Chair, having given a course on blockchain technology at MIT, he has instead toughened its stance. He claims that many cryptocurrency products and platforms are governed by existing SEC rules, and has focused more on targeting platforms offering access to digital assets rather than coin offerings.
Earlier this month, the SEC charged a BlockFi subsidiary for offering an interest-bearing account. However, this also enabled the company to register a similar product with the SEC, which could potentially offer a road map for other companies with similar products. Last year, BlockFi competitor Coinbase Global Inc. was forced to abandon its efforts to launch a crypto-lending product following a public spat with the SEC.
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