A Fragile Approach to a Fast-Growing Market
U.S. Securities and Exchange Commission (SEC) Commissioner Caroline Crenshaw has delivered a strong message on the current state of cryptocurrency regulation. Speaking at a recent event, she likened the agency’s oversight of crypto markets to “regulatory Jenga” — an unstable structure where each piece removed risks collapse.
Crenshaw’s comments signal growing internal concerns within the SEC about how to handle the booming digital asset industry. Her warning: Without a solid regulatory foundation, everything could fall apart.
What She Meant by “Regulatory Jenga”
Using the well-known game as a metaphor, Crenshaw criticized the patchwork nature of how crypto regulations are currently being enforced. She suggested that relying on case-by-case enforcement instead of clear rules creates a dangerous game of balance and uncertainty for businesses, investors, and regulators alike.
“We’re stacking cases and decisions without a stable framework beneath them,” Crenshaw explained.
The Call for Clear, Comprehensive Rules
Crenshaw urged U.S. lawmakers and financial agencies to collaborate on a full regulatory framework for digital assets. The current lack of clarity, she said, leaves crypto firms unsure about compliance and increases the risk of consumer harm.
She also pushed for proactive rulemaking, not just enforcement actions. “We need to move beyond just punishing violations,” she noted. “It’s time to give the market rules they can understand and follow.”
Risks Are Growing Alongside Innovation
With crypto products like lending platforms, staking services, and stablecoins gaining popularity, Crenshaw emphasized that risks to retail investors are also increasing. She believes that without a modern rulebook, even well-intentioned firms are operating in legal limbo.
Conclusion
Commissioner Crenshaw’s “regulatory Jenga” analogy reflects a growing consensus: The U.S. needs to modernize its crypto regulation before the tower collapses. Whether or not her call will lead to new laws or SEC rulemaking remains to be seen, but the pressure is clearly building.