Unchained Unconfirmed: People Expected a Big SEC Enforcement Action This Week. What Happened? Days - Ep.277
Oct 1, 2021
Stephen Palley, a partner at Anderson Kill specializing in financial regulation, dives into hot topics in the crypto space. He discusses the surprising lack of enforcement action from the SEC and CFTC, and why decentralized finance (DeFi) poses unique regulatory challenges. Palley shares insights on the status of stablecoins, Coinbase's decision to drop its Lend product, and the need for a different regulatory approach for DeFi compared to centralized exchanges. He expresses skepticism about applying traditional securities laws to crypto protocols, emphasizing innovation and consumer protection.
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Lack of Big Enforcement Actions
- The SEC and CFTC's lack of major crypto enforcement actions this week may be due to ongoing investigations.
- Investigations often take years and involve multiple stages, from initial inquiries to formal charges.
SEC's Focus
- The SEC, under Chair Gensler, is likely to focus on yield-related products, similar to state regulators' scrutiny of BlockFi.
- They are also working to understand DeFi and how it fits into existing securities regulations.
Coinbase Lend and Stablecoins
- Coinbase dropped its Lend product after the SEC threatened legal action.
- Some stablecoins that are not fully backed by reserves may face SEC scrutiny as securities.