Former SEC counsel says crackdown offers no regulatory insight

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Updated February 15, 2023 | Published February 15, 2023

2 mins read

Bain Capital partner TuongVy Le has urged the regulator to clarify industry rules rather than clamp down on individual companies.

Former US Securities and Exchange Commission (SEC) chief counsel and head of regulatory and policy at Bain Capital TuongVy Le has criticized the regulator’s lack of clarity on crypto regulation.

Le’s comments come amid a SEC crackdown on crypto businesses, which has sparked criticism from various corners of the industry.

Le said the latest enforcement actions involving companies such as Paxos and Kraken do not advance the industry’s overall understanding of regulatory norms, which is what such enforcement actions should be doing.

“When the SEC tells us that something is not compliant, it’s not necessarily the same thing as telling us what they would consider compliant”, she told CoinDesk’s First Mover program.

Le pointed to the regulator’s case against Kraken, which was settled. The exchange agreed to pay $30m and to shutter its crypto staking services in the US, something that was criticized by Coinbase CEO Brian Armstrong as a “stifler of innovation”.

Despite the settlement, the regulatory norms that companies ought to follow in crypto staking are not clear to many of the businesses.

Le said there is limited public information for the industry to learn from this settlement, and it’s not helpful to any of the businesses involved in the sector.

Now, SEC is pushing another case against Paxos, the issuer of stablecoin token binance USD (BUSD) which is owned entirely by Paxos.

The company is also facing pressure from the New York Department of Financial Services which ordered it to stop minting stablecoins.

Le cautioned that SEC may use either the Howey or Reves Test to prove that Paxos is in the wrong. She added that enforcement actions ought to be circumstance-specific and add clarity to the sector as a whole.

Looking for your next crypto casino? Check out: Bitcasino, Gamb.co or FortuneJack.

Written by Alex

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Alex is a well-rounded crypto writer who focuses on general market and legal developments. His main interest lies in how crypto gaming can become a more permanent part of the gaming landscape and how blockchain holds benefits to players they are not even aware of.
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