Cointime

Download App
iOS & Android

SEC Faces Criticism for Lack of Clarity in Crypto Compliance Rules

Validated Individual Expert

The U.S. Securities and Exchange Commission (SEC) is under fire for its approach to regulating the digital asset industry. Critics argue that, instead of providing clear guidelines on what is and isn’t compliant, the agency relies on “punishments” to regulate the industry, such as legal actions against companies that it deems to be in violation of securities laws. This approach is creating confusion and uncertainty, as companies struggle to understand what the SEC expects from them.

TuongVy Le, a partner and head of regulation and policy at investment firm Bain Capital, recently criticized the SEC for its lack of clarity. Speaking on CoinDesk TV’s “First Mover” show, Le argued that the agency needs to do more to explain what it considers to be compliant. “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 said.

Le cited the example of the SEC’s recent settlement with Kraken, which saw the exchange shut down its staking service platform to U.S. customers. According to Le, the agency has not made clear whether other forms of staking services, such as self-staking and decentralized staking, would be compliant with its guidelines. “Any single action, like the one against Kraken, can be limited in terms of what we can learn from it and what it means for other staking service providers,” she said.

The lack of clarity is also evident in the SEC’s case against stablecoin issuer Paxos. The agency issued a Wells Notice stating that it planned to file suit against Paxos over its alleged sale of an unregistered security, stablecoin token Binance USD (BUSD). Paxos has said that it “categorically disagrees” with the SEC’s claims, arguing that its Binance-branded token is backed one-to-one.

According to Le, the SEC may not be applying the securities definition of the Howey Test to the BUSD stablecoin, but a different set of criteria through the Reves test. “Enforcement actions are very facts- and circumstances-specific, so it can be difficult to know how broadly to read any single action,” she said. “For instance, it can be hard to discern how heavily the SEC weighs particular facts when applying Howey, it can even be hard to discern — if the complaint doesn’t contain a fulsome analysis — which facts even apply to which Howey factors.”

The lack of clarity is not just a problem for companies, but for investors as well. Staci Warden, CEO of the Algorand Foundation, recently argued that the SEC’s lack of clear guidelines is causing more harm than good. In the case of Kraken, Warden said, the exchange is “being punished, as opposed to given guidance.” If the SEC had laid out clear guidelines, Kraken’s staking platform could have been within the agency’s purview.

Warden argued that the broader issue is the lack of regulatory clarity in the crypto industry. “It’s not the regulation so much, it’s the way that regulation is taking place,” she said. “Regulation by enforcement and the lack of regulatory clarity is making it difficult for crypto platforms to know what the agency wants from them.

The lack of clarity is also having a substantial impact on the industry as a whole. The SEC’s recent crackdown on stablecoins and staking is making it more difficult for companies to operate in this space. According to Warden, stablecoins and staking are “important primitives” to the industry, and the lack of guidance is causing unnecessary uncertainty and confusion. The lack of clarity could also stifle innovation in the crypto space, as companies may be hesitant to invest in new projects without clear regulatory guidance.

It is clear that regulatory clarity is necessary for the growth and stability of the crypto industry, yet, based on our observations, there is still little overlap in the positions of different camps on this subject matter.

Get the latest news here: Cointime channel — https://t.me/cointime_en

Comments

All Comments

Recommended for you

  • Traders Fully Anticipate 25 Basis Point Rate Hike by Fed by End of 2026

    On May 22, market pricing indicated that traders have fully anticipated a 25 basis point rate hike by the Federal Reserve by the end of 2026. In related news, Fed Governor Waller stated that the Federal Reserve should not signal any further rate cuts and should remain inactive in the short term.

  • Spot Gold and New York Futures Gold Both Fall Below $4500

    On May 22, spot gold and New York futures gold both fell below $4500 per ounce, declining by 0.94% during the day. Traders have fully priced in a 25 basis point interest rate hike by the Federal Reserve by the end of 2026.

  • BTC Falls Below $77,000

    Market data shows that BTC has fallen below $77,000, currently priced at $76,977.52, with a 24-hour decline of 0.18%. The market is experiencing significant volatility, so please ensure proper risk management.

  • Fed Governor Waller: Inflation Risks Mean Fed Should Not Signal Further Rate Cuts

    On May 22, Federal Reserve Governor Waller stated on Friday that, given the increasing risks of inflation, the Fed should not consider further rate cuts as a default plan. Earlier this year in January, Waller had supported rate cuts. In his speech, he noted that the ongoing conflicts in the Middle East and rising costs of oil and other commodities are increasingly likely to trigger broader persistent inflation in the economy. He emphasized that it is time for the Fed to stop signaling that the next action is likely to be another rate cut. Waller indicated that maintaining interest rates in the current range of 3.5% to 3.75% is likely the correct approach for the foreseeable future. He added, 'If inflation does not subside quickly, I cannot rule out the possibility of future rate hikes.' Waller stated that he now agrees with the view that the Fed should clearly indicate that its next rate adjustment could be either a cut or a hike.

  • Tiger Brokers Fined 308.1 Million Yuan for Illegal Cross-Border Securities Activities in China

    On May 22, Up Fintech Holding Limited (formerly Tiger Brokers) announced that on May 22, 2026, some of its subsidiaries received a notice from the Beijing Regulatory Bureau of the China Securities Regulatory Commission (CSRC). The notice indicated that the CSRC's Beijing Regulatory Bureau had launched an investigation into the subsidiaries for suspected illegal activities related to securities, funds, and futures business. The investigation found that these subsidiaries engaged in unlicensed cross-border securities activities and illegal fund and futures-related activities in mainland China. Based on the investigation results, the CSRC's Beijing Regulatory Bureau imposed a total administrative penalty of approximately 308.1 million yuan and confiscated illegal gains totaling about 103.1 million yuan. Mr. Wu Tianhua, the company's director, CEO, and actual controller, also received a warning and was fined 1.25 million yuan. As of the end of 2025, retail customer assets in mainland China accounted for about 10% of the company's total customer assets in the consolidated financial statements.

  • Tiger Brokers States Hong Kong Entity Operates Independently, CSRC Notice Not Directly Applicable

    On May 22, in response to the China Securities Regulatory Commission's (CSRC) announcement regarding the rectification of illegal cross-border securities and futures fund operations and related penalties, Wang Shan, Chief Operating Officer of Tiger Brokers (Hong Kong) Global Limited, stated that the company is aware of the relevant notice issued by the CSRC. The company clarified that the notice does not directly apply to its Hong Kong entity, which operates independently and is regulated as a licensed corporation holding a license issued by the Hong Kong Securities and Futures Commission (SFC). (21st Century Business Herald)

  • U.S. Stocks Open: Major Indices Slightly Higher

    On May 22, U.S. stocks opened with the Dow Jones Industrial Average rising by 0.58%, the S&P 500 increasing by 0.41%, and the Nasdaq up by 0.37%. The Nasdaq Golden Dragon China Index fell by 2.2%, with popular Chinese stocks generally declining; NIO Inc. (NIO.N) dropped by 7%, Baidu (BIDU.O) fell by 3%, Beike (BEKE.N) decreased by 4%, and Alibaba (BABA.N) was down by 3%.

  • Hassett Hopes Powell Will Leave the Fed Soon for Walsh to Take Control Easily

    On May 22, Kevin Hassett, Director of the National Economic Council, expressed in an interview regarding outgoing Federal Reserve Chairman Jerome Powell and incoming Chairman Kevin Walsh: "I hope he can leave soon so that Kevin can fully and easily take charge of the Fed." Hassett stated, "I hope Jay (Powell) can step aside so we can arrange for another governor to join the Federal Reserve." He also reiterated, "We absolutely respect the independence of the Federal Reserve."

  • U.S. Stock Index Futures Rise Sharply, S&P 500 Futures Up 0.4%

    U.S. stock index futures have risen sharply in the short term, with S&P 500 futures up 0.4%.

  • BlackRock Transfers 1,587 BTC and 17,815 ETH to Coinbase

    On May 22, according to OnchainLens monitoring, BlackRock transferred 1,587 BTC, valued at approximately $122.55 million, and 17,815 ETH, valued at approximately $37.79 million, to Coinbase.