Two members of the United States House of Representatives, Representatives French Hill and Dusty Johnson, have expressed their concerns over the Securities and Exchange Commission (SEC) chair Gary Gensler’s approach to regulating digital assets. In a letter dated July 19, the lawmakers suggested that legislation would be a more effective approach to addressing regulatory issues in the crypto space, rather than relying solely on the SEC’s enforcement actions.
Hill and Johnson, who are chairs of subcommittees on Digital Assets, Financial Technology and Inclusion, and Commodity Markets, Digital Assets, and Rural Development respectively, believe that a statutory framework would provide a clear process for digital asset firms to comply with consumer protections and prevent future collapses. They argue that regulating by enforcement, which involves punishing bad actors after the damage has been done, is not sufficient for protecting the public and fostering innovation and growth.
The lawmakers also criticized the SEC for what they perceive as timed charges against individuals in the crypto industry coinciding with related Congressional activities, possibly for maximum publicity and political impact. They specifically mentioned the charges against former FTX CEO Sam Bankman-Fried, which were filed just before his scheduled testimony before the House Financial Services Committee.
Moreover, Hill and Johnson referenced a recent summary judgement affecting crypto regulation, likely referring to the SEC v. Ripple ruling that suggested XRP was not necessarily a security. This ruling has prompted several House Representatives to call on Gensler to reconsider the commission’s current approach to regulating cryptocurrencies. Gensler expressed disappointment with the ruling, especially concerning its impact on retail investors, and stated that the SEC would be reassessing the situation.
In response to the growing concerns over digital asset regulation, lawmakers in the House Financial Services Committee are evaluating a draft market structure bill aimed at clarifying the roles of the SEC and the Commodity Futures Trading Commission in regulating crypto. The bill has yet to be officially introduced and may undergo amendments based on feedback from legislators and industry leaders.
It remains to be seen how the SEC will respond to these criticisms and whether they will consider adopting a legislative approach to regulating cryptocurrencies. As the debate continues, the industry and market participants are eagerly awaiting further guidance and clarity on the regulatory landscape in the United States.
