Key Notes
- The current US SEC leadership is heavily inclined to provide clear crypto regulations to enable a seamless adoption of digital assets and Web3 protocols.
- Several lawmakers led by Cynthia Lummis have requested the SEC to relook into why crypto ETP issuers cannot engage in staking programs.
Consensys Software Inc., a top-tier blockchain tech company focused on the Ethereum ETH $2 770 24h volatility: 4.2% Market cap: $333.92 B Vol. 24h: $17.69 B network, has written a letter to Hester Peirce, a commissioner of the US SEC, requesting the newly created crypto task force to not consider Decentralized Financial (DeFi) protocols as crypto exchanges. Bill Hughes, a lawyer at Consensys, noted that the company is ready to discuss the four arguments with the SEC’s crypto task force.
Among the highlighted points, Consensys argued that the existing crypto regulatory void will largely slow down blockchain development in the United States. The firm also argued that the US SEC violates the First and Fifth Amendments, which include overstepping into content-based regulation and free speech.
“We very much appreciate the renewed interest in working with the crypto community on building a sensible regulatory framework to clarify how securities laws apply, and we wish to assist the Task Force in its work going forward as best as we can. We respectfully request that our argument concerning this rulemaking be considered and that the amendments be taken off of the regulatory agenda promptly, lest they end up hindering otherwise productive engagement among all parties,” Consensys noted .
Lawmakers Step in to Help Consensys and Wider Crypto Industry
On June 28, 2024, the US SEC filed a lawsuit against Consensys for engaging in unregistered security offerings via MetaMask staking. According to the ongoing litigation, metamask’s liquid staking tokens – stETH and rETH issued by Lido DAO (LDO) and Rocket Pool respectively – violated securities laws.
Additionally, the US SEC charged Consensys’ MetaMask for operating an unregistered broker via swaps, among other services. With the US leadership change, through pro-crypto President Donald Trump, Consensys anticipates getting the agency to drop the case and not classify DeFi protocols under crypto exchange rules.
Furthermore, Trump has heavily invested in the crypto and Web3 space, especially through the World Liberty Financial (WLFI). Additionally, the US SEC has fully dismissed the case against Coinbase Global Inc. (NASDAQ: COIN) and paused litigation against the Binance exchange for 60 days.
Meanwhile, US Senator Cynthia Lummis has led other lawmakers in pushing the SEC to clarify why the agency has been preventing digital asset exchange-traded product (ETP) issuers from undertaking staking programs.
Digital assets are the future. The U.S. can either pave the way or fall behind.
I lead my colleagues to seek clarification from the SEC on digital asset ETP staking restrictions to make U.S. asset managers competitive in the global market. ⬇️ pic.twitter.com/Fk8RjaB8LC
— Senator Cynthia Lummis (@SenLummis) February 21, 2025
Lummis highlighted that other top jurisdictions led by the United Kingdom have been allowing crypto staking for the ETP issuers, thus disadvantageous to US investors. Under the new leadership, the US SEC is, however, likely to dismiss all the litigations against the crypto industry filed by the predecessors led by Gary Gensler.
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