Mark Cuban, the billionaire investor and Shark Tank star, is not happy with how the SEC is handling crypto regulation. He says the SEC Chair, Gary Gensler, is making it too difficult for crypto companies to operate and is creating a hostile environment.
Gensler’s Approach: Regulation Through Litigation
Cuban argues that Gensler is relying too heavily on a single legal case, the 1946 SEC v. W. J. Howey Co. case, to classify crypto assets as securities. This approach, Cuban says, is essentially “regulation through litigation,” where the SEC sues first and asks questions later.
Cuban says this creates uncertainty for crypto companies, making it difficult for them to know what is allowed and what is not. He believes that Gensler should be creating a clear regulatory framework instead of relying on lawsuits to set the rules.
FTX and Three Arrows: A Case Study in Bad Regulation
Cuban points to the collapses of FTX and Three Arrows Capital as examples of what happens when crypto companies are not properly regulated. He argues that if the US had followed Japan’s model of crypto regulation, which includes strict collateral requirements and cold storage mandates, these companies would still be in business.
Cuban says that Gensler’s approach has created a situation where crypto companies are forced to operate in a gray area, leading to risky practices and ultimately, failures. He believes that a more proactive and transparent approach to regulation would be better for the industry and for investors.
