House Republicans, and even some Democrats, criticized the Securities and Exchange Commission’s approach to digital assets at a hearing Sept. 18.
“Whether it’s through politicized enforcement actions or by refusing to share its analysis around the legal classification of digital assets, the SEC has created a ‘lose-lose-lose’ situation for consumers, founders, investors and everyone in between,” said Rep. French Hill, R-Ark., chair of the House Financial Services Digital Assets, Financial Technology and Inclusion Subcommittee, in his opening remarks.
Cryptocurrency advocates and those in the industry have long been critical of what they call a “regulation by enforcement” approach from the SEC, as the agency has filed enforcement actions against a host of crypto firms and exchanges.
Dan Gallagher, chief legal, compliance and corporate affairs officer at Robinhood Markets, said that although Robinhood spent “significant time, money and effort to pursue registration (with the SEC) … in return, Robinhood received a Wells notice stating that the commission staff has made a preliminary decision to recommend that the commission file an enforcement action against us.”
Several Republicans at the hearing criticized the SEC’s approach under Chair Gary Gensler, and some Democratic lawmakers shared the same view.
“Under Chairman Gensler's leadership, the commission has taken the most hostile, aggressive and irrational approach to technology,” Rep. Wiley Nickel, D-N.C., said.
Rep. Ritchie Torres, D-N.Y., focused some of his questions on SEC Staff Accounting Bulletin No. 121, which requires any custodian of digital assets to report those assets on their balance sheets, thereby raising capital requirements. Torres said the guidance “has the practical effect of effectively banning blockchain and banning the tokenization of real-world assets.”
