Paradigm claims that SEC's outdated approach to crypto regulation is flawed and unproductive.
Paradigm, a Web3 venture capital firm, recently voiced concerns about the United States Securities and Exchange Commission's (SEC) crypto regulation strategy.
The firm's policy paper, released on April 21st, criticized SEC Chair Gary Gensler's efforts to force crypto assets, which may not qualify as "securities," into an unsuitable "disclosure framework." Paradigm argues that this approach is a case of bad policy-making.
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The VC firm, which has invested hundreds of millions in crypto and Web3 startups, highlights the SEC's inability to supply crypto asset users and investors with essential information.
In its policy breakdown, Paradigm highlights the age of the current disclosure policy, which dates back to the 1930s – well before the invention of the internet. According to the firm, these outdated policies are designed "for centralized companies issuing securities," while the crypto market is different in its nature.
Paradigm emphasizes the crucial differences between securities and cryptocurrencies. Traditional securities grant legal rights against a centralized entity, while most cryptocurrencies provide users with technological capabilities within a protocol rather than legal rights.
Moreover, Paradigm highlighted that crypto assets can operate independently and maintain full functionality without any help from their issuers.
Paradigm concludes that the SEC must adapt its current disclosure framework to accommodate new technologies and asset classes.
Unsurprisingly, without major changes to the SEC’s current disclosure regime, the SEC is unable to effectively regulate crypto asset markets.
Paradigm isn't alone in its critique, as several other crypto industry representatives have also expressed concerns about the SEC's policies. At the end of February, stablecoin issuer Circle CEO Jeremy Allaire noted that SEC is not the right institution to regulate stablecoins.
Paradigm's policy paper calls out the SEC's rigid approach to crypto regulation, emphasizing the need for a more flexible and updated framework that reflects the unique nature of the crypto asset market.
