5/16/2023 0 Comments Undermine definitionNamely, recent crypto-enforcement under the mantra of protecting investors and providing them with material information about digital-asset securities has resulted in a market environment with less information. Representing the fourth piece in my tetralogy of papers examining the regulation of cryptoassets, this Article contributes to the rich scholarship on financial innovation, enforcement, and digital-asset revolution 5 and underscores the detrimental effect of the disconnect between the ends and the means on both investors and innovators. This Article examines a crucial example of this harmful “schism” in the digital-asset (also “cryptoasset”) markets. 3 Unfortunately, a fundamental disconnect may materialize between the SEC’s statutory objectives and the ways various divisions, particularly the Division of Enforcement, implement its overarching goals. 2 Created in the wake of the Great Depression, the SEC pursues a ternary set of regulatory objectives of protecting investors, maintaining fair and efficient markets, and facilitating capital formation. The focus of our analysis will be the Securities and Exchange Commission (“SEC” or “Commission”), a leading capital-market watchdog performing a plethora of functions ranging from the oversight of securities exchanges, corporate reporting, and investment companies to enforcement and many others. This dilemma between the ends and the means may materialize when large bureaucratic institutions with sprawling divisions in charge of various aspects of their respective statutory missions enforce the law without ensuring that enforcement actually comports with the missions. In this Article, I address a situation where the means undermine the regulatory ends. The famous quote from Machiavelli’s The Prince states that “in the actions of all men, and especially of princes, one judges by the result.” 1 In short, the end justifies the means. As no one wins in this scenario, a reform revising crypto-issuer disclosure is needed. This status quo is also harmful to crypto-issuers, who face higher capital costs. To conclude, in actively enforcing pre-digital-asset law, the SEC has funneled crypto-issuers into inadequate and lackadaisical compliance with exemptions and created a status quo that is antithetical to the SEC’s core mission of protecting investors. In contrast, the more sophisticated crypto-investors rely on what the Article calls “the pure-information model” that exists independently of the SEC-enforced regulations. This compliance option reduces market transparency and is harmful to the less sophisticated crypto-investors. Using two hand-collected datasets, the Article shows that following an increase in enforcement, cryptoasset issuers have attempted to comply with securities law by resorting to private placements. ![]() ![]() This disconnect between the SEC’s means and ends is relevant not only to cryptoasset investors but also to other purchasers such as consumers and users. This Article examines a fundamental disconnect between the objectives of the SEC and the actual outcome of its policies in digital-asset markets-the agency’s enforcement efforts under the mantra of protecting investors and providing digital-asset markets with more information have produced an environment with less information. Created in the wake of the Great Depression, the SEC pursues a ternary set of objectives, including protecting investors, maintaining efficient markets, and facilitating capital formation. The focus of this Article is the Securities and Exchange Commission (“SEC”), the major capital-market watchdog. This Article addresses a situation where the means undermine the regulatory ends. Paraphrasing Machiavelli, the end justifies the means. of Maare effective immediately.Machiavelli famously said that actions of all men, particularly of regulators, should be judged by the results. Note that all other prohibitions specified in E.O. persons from engaging in transactions to sell or re-direct shipments that were laden on or after Maand previously destined for the United States. ![]() persons to comply with the import ban imposed under E.O. of Madoes not prohibit transactions such as the unwinding of contracts or other business-related activities by U.S. ![]() GL 16 does not authorize entry into new contracts.Īdditionally, E.O. of Mathat are ordinarily incident and necessary to the importation of crude oil petroleum petroleum fuels, oils, and products of their distillation liquefied natural gas coal and coal products of Russian Federation origin pursuant to written contracts or written agreements entered prior to March 8, 2022. Through 12:01 eastern daylight time, April 22, 2022, Russia-related General License (GL) 16 authorizes all transactions prohibited by E.O.
0 Comments
Leave a Reply. |