US Lawmakers Propose That SEC Chairman Consider Legislation Instead Of Enforcement Of Crypto

Two members of the United States House of Representatives have added their names to the list of lawmakers critical of Securities and Exchange Commission (SEC) Chairman Gary Gensler’s approach to digital asset regulation.

In a letter to Gensler dated July 19, Representatives French Hill and Dusty Johnson suggested The legislation was a more effective approach to address regulatory issues in the digital asset sector rather than the SEC’s “regulated by enforcement” status. Both legislators are the respective chairs of the House Financial Services Committee and the House Agriculture Committee as well as the Subcommittees on Digital Assets, Financial Technology and Inclusion and Commodity Markets, Digital Assets and Rural Development.

“Legislation will do far more than enforcement actions to prevent future collapse of digital asset firms,” the letter said. “A statutory framework would establish a process for companies to fall within regulatory parameters and comply with consumer protection, rather than relying on enforcement actions to punish a bad actor after the damage has been done.”

The SEC cannot continue to regulate by enforcement. Lawsuits filed against digital asset firms are not protecting the public and are stifling innovation and growth.

My Letter to SEC Chairman Gensler ⬇️ pic.twitter.com/RjoBNs5YQs

— Rep. Dusty Johnson (@RepDustyJohnson) 19 July 2023

Reps Hill and Johnson indicated some actions by the SEC “appear to have coincided with concerning Congressional activity, which appears to be calculated for maximum publicity and political influence”. Other members of Congress have questioned Gensler on the timing of the SEC’s charges against former FTX CEO Sam Bankman-Fried, as he was scheduled to testify before the House Financial Services Committee in December 2022.

Connected: Lawyers Claim SEC’s Gensler Offered to Act as Adviser to Binance in 2019

Both lawmakers also referenced “recent summary judgments” affecting crypto regulation, possibly referring to the SEC v. Ripple decision that suggested XRP was not necessarily a security. In the wake of the court’s decision, other House representatives have called on Gensler to reconsider the commission’s current approach to regulating crypto. The SEC chairman said he was “disappointed” by the decision because of its impact on retail investors and that the commission would assess the situation.

Lawmakers on the House Financial Services Committee are considering a draft market structure bill that aims to clarify the roles of the SEC and the Commodity Futures Trading Commission in regulating crypto. The bill has not yet been officially introduced, and could be amended based on feedback from lawmakers and industry leaders.

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