Cryptocurrency has become a much-discussed topic among financial industry players, lawmakers, and ordinary citizens alike. As the U.S. Securities and Exchange Commission (SEC) cracks down on the crypto market with its various regulations, Kraken's Chief Legal Officer Marco Santori believes a doctrine known as the "Major Questions Doctrine" could potentially undermine the SEC's authority. This legal argument states that federal agencies should not take precedence in matters of major economic significance. With more lawmakers from both sides of the aisle advocating for cryptocurrency legislation, Santori believes that the SEC and Commodity Futures Trading Commission (CFTC) will have to keep this doctrine in mind as they issue their regulations.
Santori was part of the collective of witnesses at this week's joint hearing between the House Financial Services Committee and the House Agriculture Committee, where policymakers were discussing how to tackle the growing crypto market. Most of the representatives present seemed to agree that legislative guidance is necessary, although it's uncertain how the Senate will react when they weigh in on the matter. This comes on the heels of Kraken engaging in a major settlement with the SEC as the regulators accused the platform of offering unregistered securities.
The Major Questions Doctrine may be a key factor in the SEC and CFTC's enforcement decisions. Generally, issues that are seen as major questions should be determined by Congress versus government agencies. As the SEC's regulatory arm has become increasingly aggressive, the application of this doctrine could prove to be a check against some of its decisions. Santori points out that if a court were to consider what Congress is trying to do, they could determine that the SEC is getting ahead of its mandate from Congress and thus should not be making decisions on such major issues.
Ultimately, the SEC and CFTC will have to decide for themselves if a matter falls under “major questions”. As Santori stated, the fact that lawmakers are making a concentrated effort to tackle the crypto market could be a strong indication that the Tribunal needs to further consider the Major Questions Doctrine.
Ivanna Patel
- 2023-05-12
Could the 'Major Questions Doctrine' Challenge the SEC's Crypto Market Authority?
Marco Santori, the Chief Legal Officer at Kraken, believes a legal doctrine known as the "Major Questions Doctrine" could potentially undermine the SEC's authority in the crypto market. This poses a dilemma for the SEC officials as lawmakers are advocating for legislative guidance in the crypto sphere.
