Lawmakers Criticize SEC’s Enforcement Approach, Call for Crypto Regulatory Framework

Lawmakers are expressing dissatisfaction with how the SEC regulates the crypto industry. They believe the recent action against Coinbase and Binance shows that the SEC is ignoring Congress, which is working on creating rules for cryptocurrencies.

The situation highlights the need for better communication and collaboration between regulators and lawmakers to establish a balanced and comprehensive regulatory framework for the cryptocurrency industry.

Both parties must work together and ensure that clear and compelling rules are in place, which would enable regulators like the SEC to operate within a well-defined framework and minimize the need for contentious actions like the one taken against Coinbase

It is also worth noting that SEC and Chair Gary Gensler are facing criticism for their approach to regulating the crypto industry. In recent events, the SEC targeted two prominent cryptocurrency exchanges.

Coinbase, a popular exchange, faced a lawsuit from the SEC, while Binance and its CEO, Changpeng Zhao (CZ), were hit with 13 charges.

In the lawsuits, the SEC classified several cryptocurrencies as securities. This has sparked concerns and debates about how the SEC is enforcing regulations in the crypto space.

Lawmaker Criticizes SEC’s Approach to Crypto Regulation

US Representative Ritchie Torres, a House Financial Services Committee member, expressed his concerns to Marketwatch. He criticized the recent action against Coinbase, calling it an extreme example of regulation by enforcement.

Torres accused the SEC of disregarding Congress’s efforts to create a regulatory framework. He also highlighted Chairman Gensler’s changing stance on cryptocurrencies, noting that Gensler previously supported the technology but now portrays crypto as a villain for his own political gain.

Torres emphasized the need for consistent and fair regulation in the crypto industry.

The latest enforcement action against Coinbase is an egregious example of regulation by enforcement … It demonstrates a complete contempt for Congress which is in the process of developing a framework.

Congressman Hill Advocates for Clear Regulatory Framework to Avoid Enforcement Actions in Crypto Industry

Hill, speaking to CNBC, highlighted the need for a clear regulatory framework for the crypto industry. He mentioned the recent actions against Coinbase, Binance and the collapse of FTX, stating that these incidents highlight the necessity for legislation.

Hill emphasized that the SEC wouldn’t need to resort to such actions if their proposed bill were in effect. The bill aims to provide clarity and guidance, enabling better regulation without the need for enforcement measures.

That’s why we’ve introduced this bill … If we had this bill in place, then the SEC wouldn’t have to take the actions that they’ve taken.