Majority Whip Tom Emmer has announced a plan to sponsor an appropriations amendment to restrict the U.S. Securities and Exchange Commission's (SEC) use of funds for enforcement actions related to digital assets until a comprehensive regulatory framework is in place for the digital asset industry. The SEC has accused numerous cryptocurrency exchanges of violating securities laws this year, while members of the crypto industry argue that digital assets are not covered by existing regulations.
Emmer said in a post on X that SEC Chair Gary Gensler "has abused his authority to grow the Administrative State to the detriment of the American people. Congress must use all our tools, including the appropriations process, to restrict Chair Gensler from further weaponizing taxpayer dollars."
Gensler asked for an increase in SEC funding this year, saying additional personnel and resources are needed to handle enforcement in the crypto industry, CoinTelegraph reported. Gensler said the SEC “received more than 35,000 separate tips, complaints and referrals from whistleblowers and others in FY 2022,” which resulted in more than 750 enforcement actions. Of those 750 enforcement actions, 30 were related to the digital asset industry.
Digital asset companies that have faced enforcement actions from the SEC this year include Linus Financial, Impact Theory, Hex, Celsius, Coinbase, Binance, Bittrex, Terraform Labs, Nexo Capital, Genesis and Gemini, according to the SEC website.
After the SEC filed lawsuits in June against Binance, the largest crypto exchange in the world, and Coinbase, the largest crypto exchange in the U.S., for allegedly violating securities laws, the CEOs of both companies responded to the lawsuits with statements emphasizing the lack of regulatory clarity for crypto companies in the U.S., Federal Newswire previously reported.
"We're proud to represent the industry in court to finally get some clarity around crypto rules," Coinbase CEO Brian Armstrong said in a post on X. "Instead of publishing a clear rule book, the SEC has taken a regulation by enforcement approach that is harming America. So if we need to avail ourselves of the courts to get clarity, so be it."
He also pointed out that the "SEC and CFTC have made conflicting statements and don't even agree on what is a security and what is a commodity."
In response to the SEC's lawsuit against Binance, CEO and founder Changpeng Zhao (CZ) wrote in a blog post, "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. Today’s action is another in a line of examples where, as with other crypto projects facing similar suits, the Commission 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."
Financial analyst Matt Levine, a former attorney and investment banker, wrote in his "Money Stuff" newsletter that the "key legal question" at the heart of both lawsuits is whether the digital assets listed by Binance and Coinbase are securities or not.
"If they are securities, then probably Coinbase and Binance (and Bittrex and everyone else) are operating illegal securities exchanges; if they are not securities then everything’s fine," Levine wrote.
He noted, "Just being a crypto exchange in the U.S. is, in the SEC’s eyes, illegal.”
