The Securities and Exchange Commission will continue to investigate and pursue wrongdoing in the crypto assets space despite a chorus of complaints about the level of scrutiny being placed on the industry, a top official said.

The SEC has heard the “jeremiads” from crypto industry participants about being unfairly targeted, but doesn’t intend to back off, Enforcement Director Gurbir Grewal said Friday at a conference in Washington. He added that to do otherwise would be abandoning those harmed by adverse events in the market, including many poor and nonwhite investors.

“Critics are upset because we’re not giving crypto a pass from the application of well-established regulations and precedents,” Mr. Grewal said.

“If we’re going to uphold our mandate, we can’t simply abandon the field when we confront potentially novel issues,” he said. “Non-enforcement…would be a betrayal of trust. That’s not an option for us.”

Mr. Grewal’s remarks underscored his agency’s recent scrutiny of digital assets. They followed a speech Thursday by SEC Chairman Gary Gensler, who signaled support for Congress handing some authority for cryptocurrency oversight to the Commodity Futures Trading Commission. Mr. Gensler in his speech also emphasized, though, his view that most crypto assets should be considered securities whose regulation falls to the SEC under the law.

Some crypto industry participants have accused the SEC of pursuing an agenda of “regulation by enforcement” in an uncertain legal environment. Mr. Grewal said Friday that he had a responsibility to bring cases on behalf of investors, including those who have lost money in the turbulent crypto market.

Crypto market turmoil has had an outsize impact on nonwhite and lower income investors, who may have been drawn to crypto investments because of skepticism of the financial system and of regulators who in the past have failed or ignored them, Mr. Grewal said.

“Restoring trust in the regulatory system and its institutions can’t start with us abandoning whole classes of investors by declaring our long-standing and well-established rules to be simply null and void for enforcement purposes,” he said.
Source: The Wall Street Journal
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