Former CFTC Commissioner Brian Quintenz, now the head of policy at venture capital firm Andreessen Horowitz, is calling on the U.S. Securities and Exchange Commission (SEC) to stop its barrage of lawsuits against cryptocurrency companies and instead work with legislators to establish clear regulatory guidelines for the industry.
"It has been four years since the last meaningful crypto-related guidance from the SEC. Ironically, today’s actions come on the heels of Congress putting forward a proposal that would give clear rules – to protect Americans and root out bad actors in the industry," Quintenz wrote in a June 6 Twitter post. "The SEC should be working with Congress and responsible, U.S.-based crypto companies to provide clarity – not deepen the confusion."
The SEC filed lawsuits against leading crypto exchanges Binance and Coinbase last week. The lawsuits allege that Coinbase should have registered as an exchange with the SEC and accuse Binance of offering unregistered securities and permitting U.S. customers to use the global Binance platform, instead of restricting them to its U.S.-based platform, according to the SEC website.
The week before the SEC's lawsuits against Binance and Coinbase, Congressmen Patrick McHenry (NC-10), chairman of the House Financial Services Committee, and Glenn "GT" Thompson (PA-15), chairman of the House Committee on Agriculture, released a draft of a bill intended to provide clarity for and fill the gaps in the regulation of the digital asset industry. The discussion draft includes amendments to the Securities Act of 1933 and the Commodity Exchange Act, which would add terms like "blockchain," "source code," "digital commodity custodian" and "digital asset issuer," according to a copy of the draft.
"For months, our committees have worked collaboratively to establish a viable regulatory framework for digital assets necessary to protect consumers and promote American innovation. Today’s release of the discussion draft brings us one step closer to bringing regulatory certainty to these novel and emerging technologies," Thompson said, according to a press release. "This historic joint effort with the House Committee on Financial Services aims to close existing authority gaps between the CFTC and SEC and bolster U.S. leadership in financial and technological innovation.”
Democrat Congressman Ritchie Torres said Gensler and the SEC are undermining Congress’s efforts to legislate comprehensive regulations for the crypto industry.
“The latest enforcement action against Coinbase is an egregious example of regulation by enforcement,” Torres told MarketWatch. “It demonstrates a complete contempt for Congress which is in the process of developing a [regulatory] framework.”
Binance responded to the lawsuit in a blog post, saying the company is “disappointed” that the SEC has chosen this path, especially at a time when the industry is looking for more regulatory clarity.
"Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry," the post said.
Coinbase CEO Brian Armstrong responded to the lawsuit against his company with a tweet, saying, "We're proud to represent the industry in court to finally get some clarity around crypto rules."
