Coinbase’s Chief Legal Officer, Paul Grewal, alongside Ripple’s CLO, Stuart Alderoty, has publicly criticized the Securities and Exchange Commission (SEC) for its use of the term “crypto asset security.” Both legal experts argue that this terminology lacks clarity and does not align with any established U.S. laws or regulations.
This scrutiny arrives as SEC Chair Gary Gensler, along with the commission’s five members, prepares to testify before the House Financial Services Committee—a significant event, marking the first full commission appearance since 2019.
During a recent congressional hearing, Grewal expressed concerns about the SEC’s inconsistent categorization of tokens as securities. He was joined by Rep. Ritchie Torres, who echoed that the phrase “crypto asset security” remains poorly defined within legal frameworks.
Alderoty supported Grewal’s assertions, pointing out that the term has posed challenges for the SEC, especially after the agency acknowledged using it misleadingly in a complaint against Binance. He emphasized that such inconsistencies undermine the SEC’s credibility in legal proceedings.
As the SEC faces mounting pressure regarding its regulatory strategies, critics—including House Majority Whip Tom Emmer—are increasingly vocal. In the forthcoming testimony, Gensler may face tough questions not only about cryptocurrency regulation but also concerning allegations of hiring improprieties within the SEC.
This intensifying debate signals a pivotal moment for the future of cryptocurrency regulation in the United States.
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