The SEC is under fire from Better Markets for sidelining public rulemaking in crypto oversight, raising alarms over transparency failures and investor risks.
SEC Accused of Undermining Public Accountability With Informal Crypto Policies
Policy advocacy group Better Markets, a nonprofit organization focused on financial market reform and public interest protection, submitted a comment letter to the U.S. Securities and Exchange Commission (SEC) on June 11, sharply criticizing the Crypto Task Force’s approach to policymaking. The group called on the agency to abandon its reliance on staff-issued guidance documents and return to the more rigorous framework of public rulemaking.
Contending that recent crypto-related guidance has lacked transparency, public input, and formal accountability, the letter states:
We urge the Crypto Task Force in the future to proceed through notice-and-comment rulemaking.
Better Markets pointed to remarks made by SEC Chair Paul S. Atkins on June 3, when he reaffirmed a commitment to public rulemaking, as evidence that the current approach diverges from even the agency’s own declared principles.
Benjamin L. Schiffrin, Director of Securities Policy at Better Markets, raised concerns that the SEC’s informal process precludes democratic participation and fosters unbalanced regulatory outcomes. “The Crypto Task Force does not appear to be open-minded. Instead, it seems only to want to get the SEC ‘out of the way of anything and everything in the crypto space.’ The use of guidance documents facilitates the Crypto Task Force’s ability to do this unfettered because it need not respond to any public feedback.” The group also warned that “guidance documents such as those issued by the Crypto Task Force avoid procedures intended to ‘facilitate public participation in the regulatory process.’” These criticisms were tied to broader concerns about investor protections and regulatory legitimacy.
Better Markets cited the SEC’s February staff statement on meme coins as a prime example of the dangers of this approach. The agency’s assertion that meme coins are not securities but instead “collectibles” received significant criticism. The group stressed:
The SEC’s guidance on meme coins is especially shocking because the staff admits that meme coins are speculative, experience significant market price volatility, and are often accompanied by statements regarding their risks. These characteristics do not make meme coins sound like ‘collectibles’ such as artwork, stamps, or baseball cards.
The organization concluded by underscoring the dangers of bypassing notice-and-comment: “The SEC must remember that the use of guidance documents undermines ‘the legitimacy of the rules produced by removing even the pretense of public access and participation.’” Better Markets pressed for formal rulemaking to restore public trust and ensure fair oversight in the crypto sector.