The SEC, which has for years occupied a intimidating presence over the cryptocurrency landscape, appears to be…easing up? When the courts gave their ruling OpenSea, a company whose name has become shorthand both for the NFT craze (and crash) that ensued, even exhaled. We’ve watched as joke cases have been withdrawn against Yuga Labs and OpenSea, and even a rumored shelved case against Ripple. Is the tide turning? Are we witnessing, at long last, the regulatory dawn for digital assets?

Let's be real. Regulatory agencies, too, like weather vanes, turn 180 degrees with the political winds. To think that this is all just a philosophical awakening within the SEC is, quite frankly, to be naive. Remember the dot-com boom? Initially, regulatory chaos was the order of the day. Next came enforcement, which produced the most concrete guidance ever seen on the subject, which is still developing and evolving. We’re witnessing a continuation of that reckless spirit here, just on a much grander scale in terms of money and power.

Genuine Shift or Political Maneuvering?

Think about it: OpenSea CEO Devin Finzer openly called the previous regulatory environment under Biden an "overhang," accusing the SEC of "regulation by enforcement." Now, suddenly, things are looking brighter? Is this due to the SEC having a sudden revelation, or due to the changing political tides?

This is not the first time we’ve witnessed the SEC struggle with new technology. Remember the early days of the internet? At first, the response was skepticism mingled with panic. Regulators were at a loss trying to grasp the impact of this disruptive technology, leading to a wild west environment with reactive, arbitrary, and selective enforcement. Sound familiar?

History Rhymes, Does It Repeat?

The crypto industry has become adept at playing the political game, and boy are they playing it.

  • The 90s Internet: Initial skepticism, regulatory confusion.
  • The 2010s Crypto: Initial skepticism, regulatory confusion (sound familiar?)

Still, the crypto industry’s newfound political clout is beyond question. It is no wonder that funding for pro-crypto candidates so far has exceeded $119 million. Unsurprisingly, one of the major beneficiaries—Donald Trump—has vowed to make the US the “world leader on crypto.” Super PAC power The role Super PACs played in this election cannot be overstated. Can we truthfully claim that this sudden “pragmatism” from the SEC is not shaped by these financial currents?

Follow the Money, Find the Motives

This reminds me of the tobacco industry's decades-long battle against regulation. Through dollars and lobbying they fought to postpone, undermine—and in some cases even stop—regulations no matter how strong and clear the scientific consensus. Are we in the midst of a similar strategy taking root in the crypto space?

This isn't to demonize the crypto industry. This is standard practice for every industry trying to push a policy decision in its favor. That said, we need to recognize some unintended consequences. A heavily lobbied regulatory landscape can undermine the will to enforce. This not only raises the level of risk for investors but creates new loopholes that nefarious actors will undoubtedly take advantage of.

  • Tobacco Industry: Used money to fight regulation.
  • Crypto Industry: Uses money to…influence regulation?

The NFT market downturn, catalyzed by the FTX collapse and other events, have revealed some cracks. A very permissive regulatory landscape would only increase these risks, providing cover for scams and bad projects.

And what if there’s a change in administration? Does the SEC go back to their old, more activist ways? This uncertainty breeds instability and makes any long-term investment perilous. Real change means a dedication to stable, clear rules of the road—the kind that can withstand the whims of an administration in the White House.

Long-Term Vision or Short-Sighted Gain?

The real question should be not if the SEC is being “nicer” to crypto recently. They’re working on creating a solid, healthy regulatory foundation. This framework is a necessary step towards protecting consumers, fostering innovation, and ensuring the long-term health of the digital asset ecosystem. Will the SEC’s new approach strike the right balance between protecting consumers and fostering innovation?

Don't be blinded by the apparent sunshine. As always, stay tuned, stay skeptical, and keep demanding better from our regulators. The future of crypto depends on it.

Don't be blinded by the apparent sunshine. Stay informed, stay skeptical, and demand accountability from our regulators. The future of crypto depends on it.