Acting SEC Chair Rejects Enforcement in Favor of Clear Rulemaking

Acting SEC Chair Uyeda called for clear rulemaking over enforcement to provide much-needed guidance to the industry.

Acting SEC chair calls for clear rulemaking over enforcement to provide much-needed guidance to the industry, while the first U.S. bank-issued stablecoin on a permissionless blockchain—Ethereum—has launched.

The acting chair of the SEC has slammed the courts for their role in muddling crypto regulations and urged administrative law judges to leave legal questions to the SEC in order to avoid any "contradictions."

Administrative law judges, who preside over SEC cases in a lower court setting, have been increasingly weighing in on legal questions that are typically the domain of the SEC itself, leading to a blurring of lines and potential conflicts.

"We need to be thinking in terms of clear rules, not cases, and we must leave the legal questions to the SEC," Uyeda said during a Thursday morning event hosted by the Stanford Law School Center for Law, Science & Innovation. "If we do not, we risk the administrative law judges and the SEC reaching contradictory conclusions on the same legal questions."

This statement comes at a critical juncture for the crypto industry, which is still grappling with the SEC's approach to regulation. While the SEC has been busy filing lawsuits against major crypto firms, it has also been tasked by Congress to propose new rules for the industry.

However, Uyeda pointed out that despite this mandate, the SEC has yet to present a single rule in the past year, despite being directed by Congress to do so "as soon as possible."

"We are now tasked by Congress to propose new rules, for example, for crypto security offerings, exchange-traded funds, and tokenized demand-deposit accounts, to name a few," Uyeda said. "Despite this, in the past year, the SEC staff has yet to present a single proposed rule for the Commission’s vote."

In contrast, Uyeda highlighted that the administrative law judges have been busy rendering their own legal opinions, despite not being obligated to do so.

"In the same year, the administrative law judges have issued several noteworthy decisions, some of which have touched on important legal questions that were not necessarily presented or fullylitigated in the cases before them, and perhaps should have been left to the SEC to decide in the first instance," Uyeda said.

This intervention from the acting chair comes as the SEC faces mounting pressure to provide more clear and consistent regulatory guidance to the crypto industry. The lack of clear rules has led to uncertainty and confusion among businesses, potential businesses, and the legal community at large, which will surely love Uyeda's message to embrace formal rulemaking and clear guidance.

The implications of administrative law judges weighing in on legal matters that are better suited for the SEC could be far-reaching and ultimately create more headaches for all parties involved. It is clear that a shift in focus is needed, and soon.

The first U.S. bank-issued tokenized demand deposits—stablecoins—on a permissionless blockchain, in this case Ethereum, have launched.

The new offerings, unveiled by Silvergate Bank on Thursday, mark a significant step in the integration of traditional finance with the world of cryptocurrency.

The bank explained that the tokenized deposits will be fully reserved and backed 1:1 by U.S. dollar demand deposits, ensuring complete regulatory compliance. Users will be able to deposit and withdraw funds directly through the bank's existing infrastructure, and the tokens will be issued, transferred, and redeemed for bank customers in a regulatory compliant manner.

The introduction of these stablecoins follows the recent approval of tokenized demand-deposit accounts by the Federal Reserve and the U.S. Treasury. The move is expected to open up new avenues for innovation and capital flows within the crypto ecosystem.

"We are proud to be the first U.S. bank to introduce fully-reserved and compliant stablecoins on a permissionless blockchain," said L.A. Silvergate's CEO, in a statement. "This innovation provides our bank customers with the same high-quality products and services they've come to expect from Silvergate, in a format that can be seamlessly integrated with the crypto ecosystem."

The launch of the first U.S. bank-issued stablecoins on Ethereum is a watershed moment in the history of digital assets. It signals a decisive shift in traditional finance toward the advantages and efficiencies of blockchain technology.

The implications of this development are far-reaching, potentially leading to more efficient cross-border payments, seamless integration of DeFi protocols with traditional finance, and ultimately, a more inclusive and accessible financial system for all.

Bitcoin’s price held steady on Thursday, as analysts hotly debated whether the traditional four-year halving cycle, known for sparking massive rallies, is dead.

Bitcoin’s (BTC) price is usually prone to big price swings, but it remained relatively flat over the past 24 hours, according to crypto market updates. At press time, BTC’s price was at $46,134 and it had risen by less than 1%.

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