Patrick Hillman, Binance’s chief communications officer, said in a tweet that the Security and Exchange Commission's (SEC) attempts to equate all crypto exchanges to the failed exchange FTX are hindering productive developments of consumer protections in the industry.
At a recent congressional hearing, multiple witnesses testified that many crypto industry participants want to be compliant and will do so if they have clear rules to follow.
"The ongoing effort to paint the whole industry with the broad brushstroke of FTX is blatantly transparent and detrimental to users across the globe," Hillman said in a June 6 Twitter post. "There is room to grow in this industry from a user protection standpoint, but the discussion must be grounded in reality."
The House Financial Services Committee held a June 13 hearing titled "The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem." Lawmakers and industry participants discussed the recently introduced "Digital Asset Market Structure Discussion Draft."
During the hearing, Coy Garrison, a partner at Steptoe and Johnson and a former counsel to SEC Commissioner Hester Peirce, argued that litigation from regulatory agencies is useful in holding bad actors accountable, but it does not serve as a replacement for comprehensive regulations.
"Enforcement actions are tools to hold wrongdoers accountable but they cannot replace sensible market regulation that can help deter, identify and mitigate wrongdoing," Garrison said in his testimony.
He added that digital assets do not "fit nicely into existing regulatory regimes," which makes it challenging to answer the "foundational question" of whether they should be classified as securities or commodities. He emphasized that based on his experience, "most market participants want to comply and will do so when provided with clear rules."
Emin Gün Sirer, founder and CEO of Ava Labs, also emphasized in his testimony, "Responsible actors in the blockchain space want sensible laws and regulations that incentivize growth and good behavior, punish bad actors and elevate the users of blockchain networks."
He added that industry participants are eager to collaborate with lawmakers to help craft those regulations.
"The community stands ready to provide guidance to policymakers to achieve those aims," Sirer said. "However, without sensible frameworks and collaboration, there is a clear path to losing technological leadership to other countries."
Brian Armstrong, CEO of Coinbase, the largest crypto exchange in the U.S., said in a tweet, after his company was sued by the SEC earlier this month, that Coinbase is "proud to represent the industry in court to finally get some clarity around crypto rules."
The SEC also filed a lawsuit against Binance, the largest crypto exchange in the world, to which Binance responded with a blog post, saying, "Unfortunately, the SEC’s refusal to productively engage with us is just another example of the commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry."
Texas is home to the largest Bitcoin mining operation in North America, and the Office of the Texas Comptroller reported that the business has brought hundreds of jobs to the region.