A pair of Republican lawmakers have publicly addressed U.S Securities and Exchange Commission (SEC) chair, Gary Gensler, in a letter that implies the country’s top regulator has gone out of its way to target crypto exchanges and stifle innovation.
In a joint statement, representatives Patrick McHenry (R-NC) and Bill Huizenga (R-MI) wrote in regards to two recent proposals from the SEC which expand on the definition of certain terms in the 1934 Securities Exchange Act. The definition tweaks imply that crypto exchanges and market makers would be required to register with the SEC the same way that other traditional platforms do.
“We are particularly concerned the proposed rules can be interpreted to expand the SEC’s jurisdiction beyond its existing statutory authority to regulate market participants in the digital asset ecosystem, including in decentralized finance (DeFi),” they said.
The letter states that if the SEC’s proposed rule changes are left unaddressed, then market participants could be harmed if forced to continue relying on centralized third-party intermediaries.
“The SEC’s analysis in both proposals is insufficient to justify such proposed changes. Neither analysis fully defines the scope of the impacted market participants nor does the SEC’s justification provide sufficient details on the cost of compliance. Moreover, the rulemakings fail to define the SEC’s statutory authority. Most importantly, the SEC fails to identify the problem that the rulemakings are intended to solve, particularly as it relates to requiring certain market participants facilitating digital asset transactions to register with the SEC.”
The lawmakers’ sentiments echo those of fellow Republican Tom Emmer, who also sits on the Congressional Blockchain Caucus, who said last month that he had received intelligence from those inside the industry that the SEC was targetting them with intentionally burdensome regulatory hurdles.
“My office has received numerous tips from crypto and blockchain firms that SEC Chair Gary Gensler’s information reporting ‘requests’ to the crypto community are overburdensome, don’t feel particularly… voluntary… and are stifling innovation,” he said.
“Crypto startups must not be weighed down by extra-jurisdictional and burdensome reporting requirements. We will ensure our regulators do not kill American innovation and opportunities.”