Web3-lawyer Jess Hynes said that the U.S. Securities and Exchange Commission (SEC) will tighten regulation of digital assets even further.
1/ People think the crackdown is here. It’s not yet. It’s coming though. And here’s the hottest take of them all: it will ultimately be what’s best for investors. The road there will be terrible and unnecessary.https://t.co/zSL692UBvR
— Jesse Hynes ? (@jesse_hynes) April 12, 2023
In his view, such measures are nevertheless necessary to protect investors. He asserts that many companies use ‘misleading’ marketing tactics to attract new users and depositors.
Words like ‘own’, ‘earn’ and ‘decentralised’ are common tools for creating the impression of investment opportunities and engaging the community, the lawyer says.
He added that such marketing moves can mislead people, as they do not accurately reflect the true nature of a company’s activities.
6/ Back to the point: the answer is to protect those investors by actually giving them legal rights, entitlements, and protections as a result of their purchases. This is coming. I believe many crypto and NFT projects will be deemed to have raised money by way of security
— Jesse Hynes ? (@jesse_hynes) April 12, 2023
‘The answer is to help investors by actually providing them with legal rights and remedies to protect their deposits. … I believe that many crypto and NFT projects will soon start applying similar security practices,’ said Hynes.
The lawyer clarified that he does not consider cryptocurrencies and NFTs to be securities. However, he noted that many of them were ‘packed’ and sold as ‘secured assets’ at the time of their initial offerings.
Hynes argues that the current regulatory framework is ‘confusing and outdated’, and therefore ineffective at tackling the ‘worst players in the market’. He believes the industry’s most prominent players will be targeted first by regulators.
‘Ultimately, I believe we will achieve what we should have — investor safety. Frankly, this process will be tedious and slow’, the lawyer concluded.
Earlier, U.S. Congressman Tom Emmer criticised the approach of SEC Chair Gary Gensler to digital asset oversight.
In March, the regulator filed charges against the Bitcoin exchange Coinbase. The Commission opened an investigation into listing procedures on the platform and its products — Coinbase Prime, Coinbase Wallet and the staking service Coinbase Earn.
In the same month, the agency accused the trading platform Beaxy and its executives of unregistered activity as a securities exchange, broker and clearing agency.
Earlier this month, lawyer Jeremy Hogan said that the SEC’s arguments in the Ripple case were weak. In his view, the XRP token is not a security and only ‘may meet the definition of an investment contract’.