Lawmakers in the US are seemingly concerned over how SEC regulates the crypto sector.
US Representatives French Hill and Dusty Johnson have voiced their concern over the enforcement-oriented approach Gary Gensler, Chair of the Securities and Exchange Commission (SEC), is taking toward digital asset regulation.
On July 19th, two members of the United States House of Representatives issued a letter to Gary Gensler arguing that crafting legislation could provide a more robust solution to the regulatory challenges faced by the digital asset sector, as opposed to the SEC's stance of "regulate by enforcement."
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The lawmakers, who chair subcommittees under the House Financial Services Committee and House Agriculture Committee examining digital assets, are the latest to voice this criticism.
According to the letter, regulatory laws are more likely to prevent digital asset companies' potential downfall than enforcement actions. On top of that, in the letter, Representatives noted:
A statutory framework would establish a process for firms to come into the regulatory parameter and comply with consumer protections, rather than relying on enforcement actions to punish a bad actor after the damage has already been done.
Hints were also dropped by Hill and Johnson regarding the SEC's actions that seemingly align with related Congressional activities for "maximum publicity and political impact."
Such allegations echo past Congressional member queries directed at Gensler about the timing of SEC's charges against Sam Bankman-Fried, the former CEO of FTX, in relation to his planned testimony before the House Financial Services Committee in December 2022.
Moreover, the legislators claimed that recent ruling in the SEC vs. Ripple case could influence crypto regulation.
Other Representatives, following the court's decision, have urged Gensler to reassess the SEC's existing method of crypto regulation. Gensler has expressed disappointment over the ruling, citing its implications on retail investors, and confirmed the SEC's intention to examine the matter.
Representatives Hill and Johnson are advocating for a shift from enforcement to legislation in regulating digital assets, a stance that echoes the sentiments of other lawmakers. Their call for an updated approach demonstrates the ongoing debate about navigating the crypto regulatory landscape.
