The SEC and CFTC’s recent actions against Uniswap and Galois Capital could mark a turning point in crypto regulation. With both firms settling on relatively low fines, are we witnessing regulators establish precedent for a broader crackdown on the industry?
In this episode, Larry Florio, general counsel at 1kx, delves into the implications of these settlements, the frustrations asset managers face with regulatory compliance, and whether the SEC’s approach could push the crypto industry into a corner. Will these actions set a precedent for more aggressive enforcement ahead?
Show highlights:
- Why the SEC's action against Galois Capital highlights a shift in language, focusing on tokens "offered and sold as securities"
- What a qualified custodian is and why the SEC's action against Galois punishes them for using FTX, which could have fit one definition of a qualified custodian if it hadn’t been perpetrating a fraud
- How the SEC demands crypto fund managers comply with regulations on qualified custodians while also limiting qualified custodians in crypto
- Whether the SEC is effectively banning crypto funds by requiring compliance with impossible rules
- How the SEC penalized Galois for giving affiliates better liquidity terms than outside investors
- How SEC Commissioner Mark Uyeda’s call for clarity on "crypto asset securities" reflects the industry’s frustration with the lack of clear guidelines from the SEC
- Why the CFTC's fine against Uniswap for alleged leveraged transactions may set a precedent for future enforcement actions
- How Commissioner Summer K. Mersinger's dissent highlights the unfairness of punishing Uniswap despite their proactive compliance, according to Larry
- Whether the New York Attorney General’s subpoenas to VCs about Uniswap signal a renewed adversarial approach to regulating DeFi
- The timing of these actions, along with the SEC’s Wells notice to OpenSea
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Guest
Timestamps:
➡️ 01:51 - The SEC using different language to describe tokens as securities
➡️ 04:53 - Qualified custodians & Galois Capital's use of FTX
➡️ 09:04 - Compliance frustrations for crypto asset managers
➡️ 11:58 - The SEC effectively banning crypto funds?
➡️ 18:22 - Penalty for giving some investors undisclosed preferential treatment
➡️ 18:25 - SEC Commissioner Mark Uyeda’s call for clarity on crypto assets
➡️ 19:35 - CFTC's fine against Uniswap: A troubling precedent?
➡️ 23:09 -Uniswap's compliance efforts & two CFTC Commissioners’ dissents
➡️ 24:56 - NY Attorney General’s subpoenas
➡️ 27:04 - OpenSea’s Wells notice: NFTs as securities?
➡️ 30:34 - Crypto News Recap
Links
Galois Capital:
Uniswap:
NY Attorney General’s Subpoenas
OpenSea’s Wells notice:
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