Charles Hoskinson Slams Biden for Trying to Destroy U.S. Crypto Sector

Hoskinson shared in a recent video that he believes Biden and his administration is working hard to kill the U.S. crypto industry.

The crypto industry is facing ongoing challenges with U.S. regulatory bodies, specifically the Securities and Exchange Commission (SEC). Charles Hoskinson, founder of Cardano, recently shared his very strong criticism against President Joe Biden's administration, and even accused it of trying to dismantle the U.S. crypto sector through restrictive banking access and unclear SEC guidelines.

Very similarly, former SEC commissioner Troy Paredes shared his thoughts about the broad interpretation of digital assets as securities. Meanwhile, companies like Exodus and Kraken are directly trying to work around SEC actions. Exodus is delayed in listing its shares on the NYSE due to SEC review processes, and Kraken is embroiled in a serious legal battle with the regulator, disputing the SEC's claim that it traded unregistered securities.

Cardano Founder Criticizes Biden Administration

Charles Hoskinson has openly criticized President Joe Biden and accused his administration of trying to dismantle the cryptocurrency industry in the United States. In a recent video, Hoskinson shared his concerns about the Biden administration's policies, which he believes are aimed at destroying the cryptocurrency sector in the U.S.

Hoskinson also pointed out several actions by the U.S. government that he claims have negatively affected the crypto industry, including restricted access to banking services and a regulatory approach by the Securities and Exchange Commission (SEC) that relies on enforcement rather than clear guidelines. Additionally, he referred to some recent attempts by the White House to veto legislation that could support the crypto industry.

This came after the White House opposed a joint resolution which was passed by the House of Representatives to overturn SEC guidelines that discourage banks from holding cryptocurrencies. The Biden administration argued that overturning these guidelines will undermine the SEC's ability to protect investors and the financial system.

Hoskinson is also not very happy with the use of the Securities Exchange Act of 1933 to regulate modern cryptocurrencies. He even called it absurd considering the age and context of the legislation compared to contemporary asset classes.

He pointed out that countries like Switzerland, Singapore, and Dubai have created very welcoming environments for crypto companies. In turn, this has attracted major investments that he believes could have gone to the U.S. had the policies been more favorable.

When confronted with the fact that Trump was also not very fond of crypto, Hoskinson defended the Trump administration and stated that it mostly ignored the crypto industry. On the other hand, the Biden administration is actively targeting it.

Troy Paredes Critiques SEC

Hoskinson is not the only one dissatisfied with crypto regulations and the SEC. Troy Paredes, a former commissioner of the SEC from 2008 to 2013, recently shared some of his own concerns about the SEC's expansive interpretation of digital assets as securities at the TokenizeThis 2024 conference in Miami. Paredes specifically spoke about the lingering jurisdictional issue about the classification of digital assets under federal securities laws.

Paredes pointed out that although SEC Chair Gary Gensler has given at least some clarity on what constitutes a security under the Howey test, there remains a lot of uncertainty. If a digital asset is not considered a security, then it falls outside the SEC's jurisdiction, which Paredes suggests is not being addressed at the moment considering the SEC’s very broad view of the Howey test.

The regulatory approach towards digital assets has been a serious point of contention, with the SEC specifically being criticized for its 'regulation by enforcement' strategy, as mentioned by Hoskinson himself. This ‘philosophy’ has seen the SEC take legal actions against some very well known crypto firms like Binance, Kraken, Ripple, and now Robinhood.

As was the case with Hoskinson, Paredes also places a lot of emphasis on the need for a regulatory framework that adapts to the unique challenges of digital assets, especially because of the very high level of uncertainty faced by firms that are actually trying to comply with current regulations.

Exodus Awaits SEC Decision

Meanwhile, Exodus Movement Inc. is also extremely frustrated with the SEC. The company is currently experiencing delays in listing its shares of Class A common stock on the NYSE. This pause is due to them having to wait for the SEC to review its registration statement. Originally approved by the NYSE American, the listing also received initial approval from the SEC and it was supposed to begin trading on May 9. However, the process will be on pause until the SEC finishes the compliance process.

The delay is a big setback for Exodus, as transitioning to the NYSE could greatly improve the company's visibility and financial growth in the traditional finance sector.

Exodus' CEO, JP Richardson, has been very open about his surprise and frustration at the delay. He pointed out the company's compliance and transparency throughout the process and is optimistic that the issue will be resolved soon.

Richardson also shed some light on the emotional impact of the delay, as many employees and their families gathered in New York City to celebrate the anticipated listing, only to face disappointment.

Entrepreneur and crypto personality Lark Davis speculated humorously yet critically that the SEC might be preparing to sue Exodus!

Kraken Challenges SEC

Meanwhile, Kraken is currently engaged in a legal battle with the SEC, challenging the allegations that it traded unregistered securities. In its latest court filings, Kraken refuted the SEC’s claims, criticizing the agency for a lack of clarity and for misunderstanding key legal principles related to investment contracts.

The SEC’s lawsuit was filed in November of 2023 and it accuses Kraken of generating revenue through transactions involving what the SEC calls "crypto asset securities," and providing services typical of exchanges, brokers, dealers, and clearing agencies without the necessary registrations.

Kraken’s defense challenges the SEC's understanding and application of terms like "investment concept" and "ecosystem," which it argues are inaccurately used instead of "investment contract" and "enterprise." The exchange is also contesting the SEC's belief that investment agreements have to be in written form, and pointed out that contracts can also be oral or implied.

In their motion to dismiss the case, Kraken argues that the SEC is overreaching its authority granted by Congress. The exchange supports its argument by referring to some previous SEC cases that were focused on initial coin offerings, which emphasized contractual rights and obligations. Moreover, Kraken leans on the Howey test, which is a legal standard used to determine what constitutes a security. And believes that the definition relies on an investment of capital in a common enterprise with profits expected from the efforts of others.

Eight state attorneys general have already shown support for Kraken by filing a joint amicus brief arguing that the SEC has overstepped its regulatory bounds in this case. Only time will tell if Kraken's arguments are good enough. The outcome of this case could have major implications for the regulatory landscape of crypto exchanges in the United States.