U.S. Sen. Cynthia Lummis (R-WY) has criticized the U.S. Securities and Exchange Commission (SEC) for filing lawsuits against major crypto exchanges, rather than providing the exchanges with a clear legal framework for compliance.
The SEC filed lawsuits against both Binance and Coinbase earlier this week, alleging that Coinbase should have registered as an exchange with the SEC and accusing Binance of offering unregistered securities and permitting U.S. customers to use the global Binance platform, rather than just its U.S.-based arm, Decrypt reported.
“The SEC has failed to provide a path for digital asset exchanges to register, and even worse, has failed to provide adequate legal guidance on what differentiates a security from a commodity,” Lummis said in a statement posted on Twitter June 6, after the SEC issued lawsuits against prominent cryptocurrency exchanges Binance and Coinbase.
Lummis went on to criticize the SEC's approach. "The SEC's continued reliance on regulation by enforcement continues to harm consumers." She advocated for a different approach. "Real consumer protection requires creating a robust legal framework that exchanges can comply with, not pushing the industry offshore or into the shadows.”
According to U.S. Sen. Kirsten Gillibrand's website, Lummis and Gillibrand (D-NY) introduced the Responsible Financial Innovation Act last summer, aiming to provide a comprehensive regulatory framework for digital assets. The bill included standards to determine which digital assets should be regulated as securities and which as commodities and gave regulatory authority over the digital asset spot market to the Commodity Futures Trading Commission, asserting that most digital assets are more similar to commodities than to securities.
The bill also covered stablecoin regulations, disclosure requirements in the interest of consumer protection and the development of a self-regulatory organization to complement the work of regulators.
On the website, Gillibrand said that the legislation “is a landmark bill that will establish a regulatory framework that spurs innovation, develops clear standards, defines appropriate jurisdictional boundaries and protects consumers. Importantly, the Lummis-Gillibrand framework will provide clarity to both industry and regulators, while also maintaining the flexibility to account for the ongoing evolution of the digital assets market.”
The Lummis-Gillibrand Responsible Financial Innovation Act did not advance out of the Senate Committee on Banking last fall.
At the Bitcoin Policy Summit last April, Lummis said she and Gillibrand were working on revising the bill in order to address concerns from some other lawmakers about potential fraudulent uses of cryptocurrency. Lummis highlighted the urgent need for comprehensive regulation for the industry, citing the fact that other countries such as the U.K., Switzerland and Australia are making progress on implementing crypto regulations.
Lummis warned that if the U.S. does not provide regulatory certainty, members of the crypto industry will leave the country, rather than “waking up, finding out you're subject to an enforcement action by the SEC, when you thought you were in full compliance with U.S. law."
