Economist John Berlau criticizes SEC over its handling of cryptocurrencies

12 Apr, 2019
by David Borman
Regulation
Economist John Berlau criticizes SEC over its handling of cryptocurrencies

It has been reported by Invest In Blockchain that notable Economist John Berlau recently wrote a paper in which he was fairly critical of how the United States' Security and Exchange Commission (SEC) has handled, or failed to handle, cryptocurrencies. He warns that if crypto gets labelled as securities, it could severely hurt the middle class' exposure to the asset, and by extension hurt crypto itself.

The paper, which is titled "Cryptocurrencyand the SEC’s LimitlessPower Grab," focuses both on the history of the SEC's approach to crypto, as well as the concerns many have over the regulatory body labelling cryptocurrencies as securities.

From the paper:

"Deeming cryptocurrency as a ‘security’ could put cryptocurrency out of the reach of middle-class investors because of the same red tape — both from SEC regulations and from financial regulation laws such as the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010 — that has hindered small investors’ access to stock in early stage growth companies."

Berlau takes issue with the fact that the SEC has in the past been overly aggressive in labelling things as securities, which effectively chokes out growth for many small companies as well as middle class investors. In Berlau's own words:

"Even before cryptocurrency came on the scene, the increasingly heavy hand of SEC regulation has come under scrutiny for stifling opportunities for startup entrepreneurs to raise capital and for middle class investors to get better returns on their investments. The SEC, as well as the securities lawsit enforces, have come under bipartisan criticism from academics, entrepreneurs, investors, and members of Congress for creating red tape that makes it difficult both for entrepreneurs to raise capital in the public marketsand for investors to find wealth-building opportunities"

The whole paper is well worth the read, as it elaborates on these points and many more.

Ultimately, only time will tell what type of approach the SEC will take towards crypto regulation in the US. With voices like Berlau's and hopefully internal support from SEC Commissioner Hester Peirce, there is at least a chance that reasonable regulation will emerge. As always, stay right here for all updates!

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