The chairman of the U.S. House Committee on Agriculture earlier this week said the U.S. Securities and Exchange Commission's (SEC) recent lawsuits against crypto exchanges are "regulation by enforcement" and "not an appropriate away to govern a market."

“Earlier today (June 6), the SEC filed a complaint against one of our witnesses, Coinbase…I do want to note that this action is exactly why we are holding our hearing today," said U.S. Rep Glenn "GT" Thompson (R-PA), during opening remarks of his committee's hearing, "The Future of Digital Assets: Providing Clarity for Digital Asset Spot Markets.”

"Regulation by enforcement is not an appropriate way to govern a market, adequately protect customers, or promote innovation, and I hope that the members of our committee can work together to pull together a better framework for digital asset regulation that promotes customer protections, provides clear lines of authority to regulators, and allows the regulated to clearly understand their obligations under the law," he said.

Thompson's remarks referenced a lawsuit filed earlier this week by the SEC against Coinbase, the largest crypto exchange in the U.S.. The SEC alleged that Coinbase has been operating "as an unregistered national securities exchange, broker, and clearing agency." 

The SEC also filed suit against Binance, the world's largest crypto exchange, and its founder, Changpeng Zhao (CZ), alleging the company committed numerous securities law violations.

Binance responded to the lawsuit, saying the SEC “has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology.”

The company also said the suit is "just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry."

Paul Grewal, the chief legal officer of Coinbase, voiced similar concerns, testifying at the committee hearing that the U.S. is "falling behind" other countries, and saying the crypto industry needs to be protected by clear regulatory guidelines.

He said that draft legislation, released last week by Thompson and U.S. Rep. Patrick McHenry (R-N.C.), to create a "Digital Asset Market Structure" is a "strong step toward providing overdue regulatory clarity."

Grewal said Congress should identify which digital assets should be regulated as commodities or securities or something else, and that the draft legislation is a foundation “on which to build a workable and balanced regulatory framework for crypto innovation within the US."

“While there are a lot of details still to be ironed out, Coinbase strongly encourages lawmakers from both sides of the aisle to work together and act as soon as possible to continue moving the bill through the legislative process,” he said. “The bill would establish a strong foundation to ensure robust protections for consumers, investors, and market participants engaged in crypto.

"Crypto is here to stay, and it’s in America’s best interest that Congress ensure that digital assets are appropriately defined and regulated using a risk-based approach. This bill would be a major step in creating a clear rulebook that will make crypto safer for all Americans and help ensure the US continues to lead on technological innovation.”