Crypto Chaos: Consensys Takes on SEC in a Battle of Wits and Wallets!

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In the dusty corners of the blockchain world, where the sun barely shines and the code runs deep, Consensys Software Inc. stands tall, a beacon of hope for Ethereum enthusiasts. With a heart full of ambition and a wallet that jingles with the promise of ETH at $2 623, they’ve penned a letter to Hester Peirce, a commissioner of the US SEC, like a cowboy sending smoke signals across the plains. They’re asking the newly minted crypto task force to kindly refrain from lumping Decentralized Financial (DeFi) protocols in with the crypto exchanges. Bill Hughes, the legal eagle at Consensys, is ready to tango with the SEC’s crypto task force over four compelling arguments. 🕺

Among the many points raised, Consensys argues that the current regulatory void is akin to a drought in the desert, stifling the growth of blockchain innovation in the good ol’ U.S. of A. They also claim that the SEC is stepping on the toes of the First and Fifth Amendments, like a clumsy dancer at a wedding, overreaching into content-based regulation and free speech. Who knew regulations could be so… expressive? 😏

“We very much appreciate the renewed interest in working with the crypto community on building a sensible regulatory framework to clarify how securities laws apply, and we wish to assist the Task Force in its work going forward as best as we can. We respectfully request that our argument concerning this rulemaking be considered and that the amendments be taken off of the regulatory agenda promptly, lest they end up hindering otherwise productive engagement among all parties,” Consensys noted.

Lawmakers Step in to Help Consensys and Wider Crypto Industry

On June 28, 2024, the SEC, like a bull in a china shop, filed a lawsuit against Consensys for allegedly engaging in unregistered security offerings via MetaMask staking. The ongoing litigation claims that MetaMask’s liquid staking tokens – stETH and rETH, issued by Lido DAO (LDO) and Rocket Pool respectively – have been playing fast and loose with securities laws. Oh, the drama! 🎭

But wait, there’s more! The SEC also charged Consensys’ MetaMask with operating as an unregistered broker through swaps and other services. With a change in the winds of US leadership, thanks to pro-crypto President Donald Trump, Consensys is holding its breath, hoping the agency will drop the case and spare DeFi protocols from the clutches of crypto exchange rules. Fingers crossed! 🤞

Trump, with his pockets lined with crypto investments through the World Liberty Financial (WLFI), seems to be the knight in shining armor for Consensys. Meanwhile, the SEC has waved goodbye to the case against Coinbase Global Inc. (NASDAQ: COIN) and hit the pause button on litigation against Binance for a cool 60 days. Talk about a breather! 😅

In the midst of this chaos, US Senator Cynthia Lummis has taken the reins, rallying her fellow lawmakers to demand the SEC clarify why they’ve been throwing a wrench in the works for digital asset exchange-traded product (ETP) issuers wanting to dive into staking programs.

Digital assets are the future. The U.S. can either pave the way or fall behind.

I lead my colleagues to seek clarification from the SEC on digital asset ETP staking restrictions to make U.S. asset managers competitive in the global market. ⬇️

— Senator Cynthia Lummis (@SenLummis) February 21, 2025

Lummis pointed out that other top jurisdictions, like the United Kingdom, are allowing crypto staking for ETP issuers, leaving US investors feeling like they’ve been left out of the party. But with the new leadership at the SEC, it seems likely that all those pesky litigations against the crypto industry filed by the previous regime led by Gary Gensler might just be swept under the rug. What a time to be alive! 🎉

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2025-02-22 00:53