Mike Lempres, Chief Legal and Risk Officer at wallet and cryptocurrency exchange, is complaining to the capital markets congressional subcommittee that regulation is going to stifle innovation because of uncertainty. Last time I checked, Coinbase owns the GDAX so-called “exchange,” which is trading cryptocurrencies without any regulation. Coinbase It seems the strategy here is to scare lawmakers who will call the SEC and plead with them to ignore GDAX, which is not a broker-dealer and is trading securities without being registered with the SEC. Great plan if it works. But what if it fails? A couple weeks ago, Circle, which is a startup lead by superstar Jeremy Allaire, purchased Poloniex for a whopping $400M. This sent shockwaves through the industry, allowing other “exchanges” to start licking their chops at sky high valuations. As I wrote in my post , the merger documents were leaked, which explained that Circle got absolution from the SEC. This is shocking if true, but I have my doubts about this made-up statement. How to Get a Free Pass From the SEC But let’s go back to Mike and his Coinbase megacorporation. He, along with most CEOs in the blockchain marketplace, claims that the rules are not clear. The SEC should not enforce against violators because then our U.S. brain trust will evaporate and escape into foreign lands. This is just not true. Our country is successful because of our culture of innovation and our democracy. Using this threat to conveniently escape the consequences of violating rules is just not part of our culture. We can only achieve progress when everybody plays by the same rules. If there was ever any doubt about the rules, then call the great people at the SEC and ask questions. If those who violate the rules win, then it will discourage everyone else from trying to do things the right way, which creates an uneven playing field. Again, not part of our culture of entrepreneurship. The SEC should make it clear, and I believe they are, that those who violate securities rules should face consequences, and those who invest in a culture of compliance should benefit from the elimination of the cheaters.

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