US Lawmaker Invokes SEC Lawsuits to Review Crypto Regulatory Framework

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Members of the U.S. House Financial Services Committee met to discuss clarity in the digital asset ecosystem, with some citing a recent Securities and Exchange Commission (SEC) lawsuit against tech companies. cryptography.

During a June 13 committee hearing, Ranking Member Maxine Waters said Democrats are seriously and thoughtfully considering a proposed framework put forward by Republicans on regulating digital assets. Committee Chairman Patrick McHenry said he expected bipartisan input on a bill, with markups after a July Congressional recess.

Waters suggested that without thorough analysis and collaboration between the two political parties, digital asset legislation could leave the door open to potential fraud and misuse of customer funds. The California rep cited the collapse of FTX, criminal charges by former FTX CEO Sam Bankman-Frieds, and recent SEC actions against Binance and Coinbase.

I’m particularly concerned that the Republican bill will allow crypto companies currently being sued for violating our securities laws to continue doing business through provisional registration, Waters said. The bill appears to end all enforcement action by the SEC against crypto firms, even when they have committed fraud. This interim registration could reward bad actors with a free get-out-of-jail card and allow them to continue harming consumers and investors.

The bill introduced on June 2 would prohibit the SEC from refusing digital asset trading platforms to register as a regulated alternative trading system and would allow such companies to offer digital products and stablecoins from payment. It would also restructure the roles that the SEC and the Commodity Futures Trading Commission play in regulating digital assets in the United States.

The American public was the one holding the bag when it comes to FTX and when it comes to violations, or alleged violations, when it comes to Binance and Coinbase, Prometheum founder and co-CEO Aaron Kaplan said during of the hearing. The best way to go is quite clear and logical, it is the application of federal securities laws [through the SEC].

Related: US Senator Revamps Crypto Regulation Efforts Amid SEC Lawsuits

Other lawmakers have reacted differently to the SEC’s apparent regulatory-by-enforcement approach. On June 12, Ohio Rep. Warren Davidson, a Republican who is also a member of the House Financial Services Committee, proposed firing SEC Chairman Gary Gensler through legislation that would also restructure the power of the commission. The legality of this proposed move is unclear.

Amid SEC lawsuits, Binance.US pushed back against commission efforts to freeze its funds. At press time, a federal judge in Washington, DC is considering competing motions from the SEC, Binance, and Binance.US over how to handle the assets and other pending lawsuits.

Magazine: Crypto Regulation: Does SEC Chairman Gary Gensler Have the Final Word?

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