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Lawmaker raises issues with SEC’s crypto strategy

Lawmaker raises issues with SEC’s crypto strategy

GrafaGrafa2024/09/19 02:35
By:Mahathir Bayena

A U.S. lawmaker has sharply criticised the Securities and Exchange Commission (SEC) and its Chair, Gary Gensler, for their handling of cryptocurrency regulation, accusing them of “enforcement abuse” that is stifling innovation and creating uncertainty in the digital asset markets.

This accusation was made during a Sept. 18 hearing of the House Subcommittee on Digital Assets, Financial Technology, and Inclusion, chaired by Representative French Hill of Arkansas.

The hearing, titled "Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets", focused on the impact of the SEC’s regulatory practices on the cryptocurrency industry.

Rep. Hill claimed that the SEC’s approach under Gensler has led to confusion within the market, making it difficult for legitimate crypto firms to operate.

Hill stated, “We’re against SEC enforcement abuse and making it hard for legitimate actors who are trying to follow the rules to do a fine job and bring innovation and technology to our markets.”

He also pointed to the Financial Innovation and Technology for the 21st Century (FIT21) Act, a bill currently advancing through Congress, as an alternative regulatory framework for the crypto sector.

During the hearing, former SEC commissioner Dan Gallagher and former acting enforcement chief Michael Liftik testified.

Gallagher, now working at Robinhood, argued that the SEC’s “regulation by enforcement” strategy has led to inconsistency in the industry and called for Congress to step in with clearer, more defined regulations.

He suggested that the SEC’s aggressive enforcement actions have created uncertainty, making it difficult for the industry to innovate and grow.

Not everyone agreed with Hill’s assessment.

Democratic Representative Stephen Lynch countered, suggesting that the cryptocurrency industry itself was playing politics by donating to various candidates ahead of the 2024 elections.

“If anyone is playing politics, it is the crypto industry,” said Lynch, adding that the sector’s resistance to regulation has raised concerns about its connection to illicit activities.

Lynch pointed to former President Donald Trump’s recent token launch and argued that some aspects of the digital asset space are being used to facilitate illegal transactions.

Rep. Wiley Nickel, another Democrat who has supported digital assets, also criticized Gensler’s approach to regulating the sector.

Nickel, who has been a vocal advocate for clearer crypto rules, said that the SEC’s current policies are harming American innovation and competitiveness.

He added that Gensler’s actions are detrimental to the Democratic administration.

Nickel previously co-authored a letter to the Democratic National Committee, urging Vice President Kamala Harris to shift the party’s stance on digital assets to present a more favorable view to the public.

The hearing was held just weeks before the U.S. election, which could impact the leadership of the House Financial Services Committee and the subcommittee overseeing digital assets.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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