Crypto’s Cops Get Ready for an Uneven War

Crypto’s Cops Get Ready for an Uneven War

Anita and I talked with Jill Gunter of Slow Ventures about why there are so many freaking blockchains out there and if we’re going to a future where everything is based on a single ‘chain’ on our Chain Reaction podcast this week. More information is provided below. Last week, we spoke about how Bitcoin is becoming politically isolated as a result of its energy footprint. We discussed how the Wikimedia Foundation restricted crypto payments after accepting them for eight years due to the energy footprint of Bitcoin and Ethereum on the podcast this week. This story has only just begun, despite the fact that it has been going on for more than a decade. We discussed how the crypto police are attempting to stay up with the web3 growth this week.

You may sign up for the newsletter on TechCrunch’s website and receive it in your email each Thursday afternoon. While you’re at it, follow me on Twitter so you don’t miss out on critical information like NFT etiquette. The government’s top crypto cops received more funds this week to expand their staff, and they sent out a nice little press statement to warn the crypto sector that they’re on their way. The SEC is increasing the size of the team from 30 to 50 people and rebranding the “Cyber Unit” to “Crypto Assets and Cyber Unit.” The SEC’s decision to hire up to 20 new enforcement agents is significant, but in cryptoland, that type of staffing is what most firms get after a seed round.

The SEC has always had an uphill battle, but 10 years ago, the possibility of someone creating securities out of thin air from their basement wasn’t nearly as serious as it is now. The crypto faucet has released thousands upon thousands of suspect projects that I’m sure the regulatory body would like to investigate, but for the time being, they’re left with the near-impossible task of regulating an industry that’s exploding and expanding its ambitions with the utmost respect for the spirit of securities law. As we discussed on the show this week, the announcement of the SEC’s crypto unit’s growth was met with skepticism by several in the sector, who argue that more advice is needed before increased enforcement.

Of course, this isn’t altogether unexpected. It’s always been a wonderful little talking point for crypto firms when it comes to regulation – they can claim they want more regulation because they know how far out most of it is. When the government takes action against them, they might claim that the under-resourced agency has it out for them since they’re singled out over others who are doing the same thing. This has been the case for quite some time.

This isn’t to suggest the SEC hasn’t taken action; I’m sure they’re concentrating on high-profile cases right now. The organization claims to have initiated more than 80 “enforcement actions” against fraudulent and unregistered offers, totaling more than $2 billion in monetary redress. That’s a fantastic sum of money, but it’s still a drop in the ocean. 

The SEC, for its part, says it will use its expanded team to combat fraudulent or illegal activity in the following areas: crypto asset offerings, crypto asset exchanges, crypto asset lending and staking products, Decentralized finance (“DeFi”) platforms, Non-fungible tokens (“NFTs”), and Stablecoins. That’s… pretty much everything there is, but I suppose they didn’t mention anything about the metaverse… For those predicting a regulatory assault on cryptocurrency, I believe it’s critical to set expectations and assess who precisely is on the opposite side of the equation.