Adam Cochran: SEC’s attitude towards cryptocurrencies is dictated by political interests

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The position of the US Securities and Exchange Commission (SEC) on digital assets reflects someone’s political agenda and impedes innovation as well as consumer protection. This opinion is shared by the partner of the venture capital company Cinneamhain Ventures Adam Cochran.

The specialist substantiated the arguments with the situation around the conflict between the Bitcoin exchange Coinbase and the SEC and the regulator’s questions to the Uniswap decentralized exchange. Regarding the latter, he stressed that officials should be aware that the DeFi platform is not able to “just come and register.”

Earlier, the head of the Commission, Gary Gensler, said that he expects similar actions from DEX and centralized exchanges.

Cochran stressed that such comments of the head of the SEC are not consistent with the knowledge gained as part of his work at the Massachusetts Institute of Technology, where he lectured on blockchain and digital currencies.

According to the expert, Gensler even noted that securities laws are transparent and simple for the industry, and that Congress should clarify them.

Cochran compared the SEC chairman’s actions to Commissioner Hester Pierce’s proposal for a regulatory vacation for crypto startups and Republican Don Beyer’s initiative to create guidelines for digital assets.

But at present, the Commission’s rhetoric boils down to three theses:

  • we will not tell you which tokens are securities;
  • there are many assets on each platform;
  • some of them statistically may be in this status.

There are only two possible solutions, according to the department:

  • enter into a dialogue with us (Coinbase made up its mind and received a lawsuit);
  • just register (technologically and legally impossible for the protocol. There are no rules indicating such a need).

A registered securities platform is required to provide for a transfer agent and a clearing and settlement system.

Both act as centralized intermediaries between the exchange and the client.

The work of the former actually boils down to registering property rights, keeping records, distributing dividends and canceling / issuing various share certificates.

DeFi is changing all this due to ERC-20 tokens and a dashboard that requests data from the blockchain.

The settlement and clearing system verifies and finalizes the transaction, similar to an escrow agent.

According to Cochran, both elements are completely meaningless in the blockchain due to instantaneous settlements.

The addition of a transfer agent and a clearing and settlement system will only bring centralized risk to the process and make it more risky for DeFi participants, the specialist is convinced.

Cochran stressed that in addition to this, the SEC did not require registration from DEX.

A partner at Cinneamhain Ventures referred to the Commission’s work in recent years. In its investigations, the regulator has repeatedly interpreted DEX as a “securities platform” and “a platform on which securities are held.”

All of their actions were directed against fraud, ICOs, centralized platforms and practices clearly positioned as investments (which is all fair), Cochran explained.

The only DeFi platform on this list was DMM. But it was not decentralized and, obviously, was engaged in investment contracts, the specialist recalled.

In a confrontation with Coinbase, the SEC did not even bother to show the exchange a list of securities, Cochran said. Instead, officials sent a notice to Wells [письмо, информирующее компанию о возможных нарушениях, связанных с финансами или финансовой отчетностью].

“If there are ‘securities’ on Coinbase, why not list them?” Cochran wondered.

In the situation with Uniswap, according to the expert, the SEC is more interested in “how the team promotes the product” than in the product itself.

“If the SEC statements were accurate, it wouldn’t matter. Is the platform guilty anyway, regardless of marketing? ”Cochran asked.

Finally, a partner at Cinneamhain Ventures emphasized the need for consumer safety and an inclusive financial system. This is what cryptocurrencies are built on.

He lamented that the SEC is “holding back” progress, while regulators in other countries interact with the industry. Instead of working with industry participants, officials engage in intimidation. Cochran called on everyone to speak with a united front.

Earlier, the head of Ripple Brad Garlinghouse, the director of the organization for the promotion and protection of the interests of the cryptoindustry Coin Center Jerry Brito, as well as the CEO of Kraken Jesse Powell supported Coinbase in the conflict with the SEC.

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