U.S. lawmakers issued a letter to Securities and Exchange Commission Chair Gary Gensler questioning his approach to digital asset regulation. U.S. Reps. French Hill, R-Ark., and Dusty Johnson, R-S.D., indicated legislation was a more effective strategy for resolving regulatory challenges in the digital asset field than the SEC's posture to "regulate by enforcement," according to a July 19 BTC News report.
"Legislation would do far more to prevent future collapses of digital asset firms than enforcement actions,” Hill and Johnson said in the letter, according to BTC News. “A statutory framework would establish a process for firms to come into the regulatory parameter and comply with consumer protections, rather than relying on enforcement actions to punish a bad actor after the damage has already been done.”
The two legislators are the respective chairs of the subcommittees that look into digital assets in the House Financial Services Committee and House Agriculture Committee, BTC News reported.
According to Hill and Johnson, some SEC actions have been "seemingly timed to coincide with related Congressional activity, which appears calculated for maximum publicity and political impact," BTC News noted.
Given that Sam Bankman-Fried was set to appear before the House Financial Services Committee in December 2022, several members of Congress have questioned Gensler about the timing of the SEC's allegations against the former FTX CEO, BTC News said. According to attorneys, Gensler promised to advise Binance in 2019.
The two legislators also brought up a recent summary judgment that had an impact on cryptocurrency legislation, according to BTC News. They were likely referring to the SEC v. Ripple decision that suggested XRP wasn't inherently a securities. Other House members urged Gensler to reevaluate the commission's existing strategy for regulating cryptocurrency in the aftermath of the court ruling.
Due to the decision's effect on individual investors, the SEC chair said he was "disappointed" in it and the commission will be reviewing the matter, BTC News reported.
A draft market structure bill being considered by lawmakers in the House Financial Services Committee seeks to define the functions of the SEC and Commodity Futures Trading Commission in the regulation of cryptocurrency, according to BTC News. The bill hasn't been formally submitted yet, and it might get changed in response to lawmakers' and leaders' suggestions.
