Lawmakers Slam SEC's Crackdown, Demand Regulatory Framework
Several lawmakers have strongly slammed the US Securities and Exchange Commission (SEC) for its enforcement-based approach to regulating the cryptocurrency industry. The SEC's recent actions against leading crypto exchanges Coinbase and Binance have drawn sharp rebukes from legislators, who argue that such measures demonstrate a lack of respect for Congress and its ongoing efforts to establish a comprehensive regulatory framework. One lawmaker said the regulator’s latest action against crypto exchange Coinbase “demonstrates a complete contempt for Congress which is in the process of developing a framework.”
Lawmakers Express Concern over SEC's Disregard for Congress
The lawmakers have condemned the Securities and Exchange Commission (SEC) and Chair Gary Gensler for the enforcement actions against Coinbase and Binance, two leading cryptocurrency exchanges this week.
The Nasdaq-listed crypto exchange Coinbase faced a lawsuit from the SEC on Tuesday, while Binance and its CEO, Changpeng Zhao (CZ), were slapped with 13 charges by the securities regulator a day earlier. The SEC labelled 12 crypto tokens as securities in the Binance lawsuit and several more in the Coinbase one.
Congressman Ritchie Torres (D-NY), a member of the House Financial Services Committee that oversees the SEC, told Marketwatch on Wednesday:
"The latest enforcement action against Coinbase is an egregious example of regulation by enforcement … It demonstrates a complete contempt for Congress which is in the process of developing a framework."
The congressman added that Chairman Gensler’s current perspective on crypto reflects a stark departure from his previous support for the technology when he taught a course on blockchain and money at the Massachusetts Institute of Technology (MIT) in 2018.
Torres described:
"His view of the law has been constantly changing … Mr Gensler has gone from a crypto cheerleader to a crypto sceptic… He’s portraying crypto as the villain to portray himself as a political hero."
Robust Regulatory Framework Essential
Several other lawmakers have similarly condemned the SEC and Gensler for their enforcement-centric approach to regulating the crypto industry, including Senators Cynthia Lummis (R-WY) and Bill Hagerty (R-TN). Congressman French Hill (R-AR), chair of the House subcommittee on digital assets, accused the SEC of attempting to deflect attention from its failure to prevent the collapse of crypto exchange FTX. He emphasized the urgent need for a clear and concise statutory framework, aimed at filling regulatory gaps and providing consumer protections.
Last week, Hill and several other lawmakers released a discussion draft of legislation to provide “a statutory framework for digital asset regulation intended to provide clarity, fill regulatory gaps, and foster innovation, while providing adequate consumer protections.”
Hill told CNBC in an interview on Wednesday: “Both the action on Coinbase, on Binance, and of course the infamous collapse of FTX last year, speak to me that we need this clear, concise, statutory, framework.” The congressman emphasized:
"That’s why we’ve introduced this bill … If we had this bill in place, then the SEC wouldn’t have to take the actions that they’ve taken."
Lawmakers believe that a robust regulatory framework is essential to ensure accountability, foster innovation, and protect consumers in the rapidly evolving crypto landscape. The SEC's enforcement-centric approach has drawn criticism for its perceived lack of foresight and cooperation with Congress. As discussions on digital asset regulation continue, legislators are calling for a more constructive and collaborative approach from the SEC and Chairman Gensler.
What are your thoughts on the SEC's actions against Coinbase and Binance? Please share your opinions in the comments section below.
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