Amid the increasing demand for crypto regulations in the United States, lawmakers have been putting in their contributions too. While some lawmakers have introduced a comprehensive set of regulations for the sector, some have criticised the regulator for being antagonistic to crypto entities.
In a recent move, Congressman Ritchie Torres (Democrat, New York), targeted the Securities and Exchange Commission (SEC) and called for its investigation. In two letters revealed Thursday, the lawmaker requested for two separate independent investigations of the SEC for its “haphazard and heavy-handed approach to digital assets.”
The lawmaker counted the following two reasons for calling the investigation of the regulator- the SEC granted a special purpose broker-dealer (SPBD) licence to Prometheum, “a trading digital assets platform that does not trade digital assets,” under unusual circumstances. Then, he cited SEC’s failure to create a rigorous but workable process for registering real-world digital assets platforms.
Among the two letters, Rep. Torres addressed one letter to the SEC’s Inspector General Deborah Jeffrey and another to the Government Accountability Office’s Comptroller General Gene Dodaro. In the letters, he also called out regulator for bringing the elements of politics into the process of registration. He wrote:
The dubious decision to licence a deceptive digital assets platform reflects the latest attempt by Chair Gary Gensler to politicize the registration process to an extent seldom seen in the SEC’s history. When it comes to trading platforms that operate in the real world, the SEC’s path to registration remains a bridge to nowhere.
Furthermore, Torres called the SEC “an overzealous traffic agent who arbitrarily tickets drivers for speeding while keeping everyone endlessly guessing about the speeding limit,” adding that “regulation by enforcement is no way to regulate.”
Notably, the SEC and its chief Gary Gensler have often cracked down on the industry and have filed charges against major crypto exchanges including Binance and Coinbase. Right after the lawsuit, Christopher Giancarlo, former chair of Commodity Futures Trading Commission (CFTC), called SEC’s move against Coinbase a “political” move.
Simultaneously, amid the regulatory feud between the two primary regulatory agencies in the US- SEC and the CFTC, the lawmaking wing has been divided, each picking its own side. In a recent bill, a Republican-Democrat senators duo has proposed a bill which gives the authority of the sector to CFTC.
In particular, Democrats have largely been supportive of Gensler and SEC while Republicans do the contrary and criticise it. To this extent, Republicans also introduced a bill to remove Gensler from his current position. However, the SEC has been on an enforcement spree and such an approach is largely harmful for the industry and despite the reason, a Democrat lawmaker calling it out marks a significant move.