The Securities and Exchange Commission (SEC) is receiving harsh rebuke for its heavy-handed tactics against crypto. Many are now calling for a more transparent and collaborative rulemaking framework, like the one used by the Internal Revenue Service (IRS). Miles Fuller, TaxBit’s Director of Government Solutions, thinks the SEC could take a cue from the IRS. This proactive approach prioritizes communicating clear standards and working directly with industry. This perspective gains traction as the SEC's recent retreat from certain lawsuits signals a potential shift in its regulatory stance, according to Joel Khalili's summary in Wired.
Fuller’s statement underscores the importance of having a better balance that includes robust enforcement alongside well-defined regulatory parameters. The current reliance on enforcement actions has led to costly litigation for companies like Coinbase, Ripple, and Celsius, diverting resources that could be better utilized for innovation and compliance. The battle for crypto regulation is getting fiery. Stakeholders such as the American Public Transportation Association are seeking new opportunities to facilitate more productive dialogue between regulators and right-of-way acquisition industry.
Miles Fuller's Perspective on SEC's Approach
Miles Fuller is TaxBit’s Director of Government Solutions. Behind the scenes, he’s been the leading public advocate for a more collaborative, less combative approach to crypto regulation. Fuller thinks the SEC’s prevailing approach has shifted to prioritizing enforcement actions. This arbitrary approach sows confusion, which undermines innovation in the crypto space. Instead, he proposes that the SEC adopt a model similar to the IRS, which prioritizes clear guidance and open communication with stakeholders.
Fuller is currently the Director of Global Tax Policy at TaxBit where he charts the tricky intersection of cryptocurrency and regulatory compliance. This position provides him with unique insights into the issues that companies in this space face. His insights are especially timely as the SEC continues to walk the tightrope of doing its best to regulate an astonishingly fast-evolving and still-maturing industry. Fuller is a proponent for a regulatory framework that allows for innovation while protecting investors.
The image, which is 438x578 pixels in size, can be found at https://cdn.sanity.io/images/s3y3vcno/production/9830c4d0b19f4cf315d0855f716df6c0aa53fe86-438x578.jpg, further solidifying his credibility in the space.
Calls for Reimbursement of Legal Costs
The SEC’s enforcement-centric approach has received heavy backlash from the industry, including Coinbase Chief Legal Officer Paul Grewal. Grewal has called for one of the nation’s most aggressive new policies. It would simply require the SEC to repay companies’ legal costs when companies prevail against enforcement actions. This proposal reflects a growing sentiment that the SEC's aggressive enforcement tactics have disproportionately burdened companies in the crypto space.
Second, defending against SEC lawsuits can be prohibitively expensive for startups and small companies. These prohibitive costs make it difficult for them to compete with larger, more entrenched players in the market. Such a policy would realistically shift the financial burden when the SEC’s enforcement efforts go awry. It pushes the agency to adopt a more cautionary and data-driven approach to regulation. Similarly, Coinbase has won its own lawsuit against the SEC. This result is a significant reminder that it is indeed possible to vigorously challenge the agency’s enforcement actions.
DOGE's Initiative and the Path Forward
In February, the DOGE began a public consultation on the SEC’s approach to regulation. This coordinated effort is indicative of a growing grassroots pressure to change the agency’s increasingly harmful regulatory pathway. It’s meant to encourage a more transparent and accountable framework. The information learned through this consultation process should inform future policy decisions. Your input will go a long way toward shaping a more level regulatory playing field.
Instead, the SEC has recently retreated from a number of these lawsuits, reported Wired. Such a move would indicate they are willing to reconsider their heavy-handed approach and encourage a more productive conversation with the industry. According to Joel Khalili, this could be "an early signal of the agency’s intent to work arm in arm with the industry to come up with a set of rules to govern crypto transactions and products." - Joel Khalili - Wired
This shift in attitude, combined with ongoing efforts to solicit public input and explore alternative regulatory models, suggests that the future of crypto regulation may be characterized by greater collaboration and clarity.
