“The SEC has never said what a compliant crypto exchange would look like under a securities regulatory regime,” said TuongVy Le, who handles regulatory strategy at Bain Capital Crypto. “There’s just a lack of clarity there.”
Patrick Daugherty, a lawyer who once worked at the SEC but now represents crypto companies and exchanges, put it in more stark terms: “There is no path available under current law for a crypto exchange to register with the SEC,” he said, citing a registered exchange’s requirements to maintain an audit trail, have only brokerages as members and trade only securities and nothing else. “There is no crypto exchange in existence that can comply.”
Daugherty, who works at Foley & Lardner in Chicago, said he doesn’t necessarily recommend his clients voluntarily go in and talk with the regulator, as Gensler often suggests. He said the agency never says yes to anything, and it sometimes uses what it learns in enforcement actions.
“I don’t think it’s the staff; I think it’s the chairman,” Daugherty said. “This is how Gensler chooses to do things”
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