People Expected a Big SEC Enforcement Action This Week. What Happened?

Stephen Palley, partner at Anderson Kill, discusses a few hot-button crypto regulatory issues like lending products, whether DeFi protocols fall under the SEC’s purview, and more. Show highlights:

• why Stephen thinks the SEC and CFTC did not announce more extensive crypto enforcement news this week
• what areas the SEC Chair Gary Gensler and the SEC as a whole are focused on regulating
• what Stephen has heard about whether stablecoins that are not fully-backed are securities
• why Coinbase decided to drop its Lend product
• why Stephen is skeptical that decentralized protocols should be regulated under existing securities laws
• how securities law is contrary to consumer protection in light of DeFi protocols and airdrops
• why DeFi AMMs should be regulated differently than centralized market books
• whether companies running a front-end for a DeFi protocol should be considered an exchange
• why crypto devs are “going Satoshi” because of US securities laws

Thank you to our sponsors!

Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021       

Nodle: https://bit.ly/3AXGydJ 

Sorare: https://sorare.com        

 

Episode Links

Stephen Palley

• Twitter: https://twitter.com/stephendpalley
• Unchained podcast appearance speaking about Ripple: https://unchainedpodcast.com/the-secs-lawsuit-against-ripple-and-2-execs-what-you-need-to-know/ 

Topics Covered

Lending Products

• Coinbase blogs regarding Lend
  • https://blog.coinbase.com/the-sec-has-told-us-it-wants-to-sue-us-over-lend-we-have-no-idea-why-a3a1b6507009 
  • https://blog.coinbase.com/sign-up-to-earn-4-apy-on-usd-coin-with-coinbase-cdad79e5f5eb
• Lend overview: https://www.jdsupra.com/legalnews/a-september-to-remember-coinbase-avoids-7608131/ 

• Brian Armstrong angry tweet storm
  • https://twitter.com/brian_armstrong/status/1435439291715358721
• BlockFi and Celsius overview
  • https://www.coindesk.com/policy/2021/09/17/3-states-alabama-securities-commission-also-claims-celsius-violated-securities-laws/ 

SEC + Gary Gensler

• How SEC Chair Gary Gensler’s Views on Crypto Have Changed Since His MIT Days
  • https://unchainedpodcast.com/how-sec-chair-gary-genslers-views-on-crypto-have-changed-since-his-mit-days/
• SEC Chair Gary Gensler Washington Post Q&A
  • https://www.washingtonpost.com/washington-post-live/2021/09/21/transcript-path-forward-cryptocurrency-with-gary-gensler/ 
• Gary Gensler + Elizabeth Warren letters
  • https://www.warren.senate.gov/newsroom/press-releases/warren-releases-response-from-sec-chair-gensler-affirming-need-to-regulate-cryptocurrency-exchanges-and-protect-investors-and-our-financial-system 

Other

• Uniswap delisting certain tokens through its front end
  • https://www.theblockcrypto.com/linked/112399/uniswap-labs-culls-synthetic-stock-and-derivatives-citing-evolving-regulatory-landscape