Partner Hailey Lennon appeared on the "Thinking Crypto" podcast to discuss how the crypto industry is rebounding from bear market collapses post-FTX and fighting back against regulatory overreach.
During the March 14 episode, Lennon said over the last six months or so, the industry has started to heal from the FTX collapses and various bankruptcies, as well as the numerous enforcement actions by the U.S. Securities and Exchange Commission (SEC).
"I think the industry's feeling very excited about the companies that remain and all of the legitimate crypto projects that are out there and what we can accomplish," she said. "[I]'ve been working in the space for 10 years, and we've definitely matured as an industry. Hopefully the Bitcoin and crypto industry will always sort of maintain some of its childlike aspects, just in terms of what we're trying to change in the world and questioning the status quo, but as more traditional financial institutions get into this space, we get a little more buttoned up and with that comes the shake out of anyone that's in the industry for the wrong purposes."
As the debate continues about how to regulate entities in the crypto space, Lennon said there isn't a question as to whether the SEC can regulate securities and investment contracts. The argument comes, however, whether there actually were investment contracts for purchase of these cryptocurrencies with exchanges like Coinbase and Kraken, she said.
In the case of Kraken – which was charged by the SEC in November for operating its trading platform as an unregistered securities exchange, broker, dealer and clearing agency – the company had eight state attorneys general filed a joint amicus brief in February supporting the assertion that there needs to be proof from the SEC of an investment contract. If the SEC cannot show that proof, then it's overreach and Congress does not allow that, according to the brief.
"The abuse of power by a regulator can be very damaging to any industry, so it's not something that people should be OK with," Lennon said. "[T]he industry deserves some clarification on how you can have an operational crypto exchange in the U.S. without risk. It's kind of a crazy stance for a regulator to take, to just say 'you can keep business as usual and risk it, we're not going to explain why we're listing certain tokens in these complaints.'"
During the episode, Lennon also discussed the SEC lawsuits against certain cryptocurrencies, whether an Ethereum ETF will be approved, as well as whether crypto users can sue the SEC and the government.
The "Thinking Crypto" podcast, hosted by Tony Edward, shares news about the industry and interviews with crypto and blockchain founders, CEOs, regulators, politicians and lawyers involved in building and investing in the market.
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