U.S. Congress members express concern over the SEC’s growing scrutiny of the crypto sector
- Congressmen have accused the SEC of “overburdensome” investigations that are causing suffocation for crypto firms to operate in the U.S.
- The recent letter could help crypto firms in America garner support from Congress in dealing with the SEC.
Well, it’s the U.S. Congress vs the SEC now as the government starts working on the crypto regulatory framework. Eight members of the U.S. Congress have recently expressed concern that the SEC might be going overboard on its crypto scrutiny and, in turn, suffocating the industry.
Republican Minnesota Congressman Tom Emmer has put forward a letter to the U.S. Securities and Exchange Commission (SEC) chairman Gary Gensler. He writes that the “overburdensome” investigation of the crypto industry could be sending a wrong message of stifling innovation.
Emmer and other Congressmen suggest that the SEC is suffocating and drowning crypto firms through its latest actions. In one of his recent Tweets, Emmer wrote:
My office has received numerous tips from crypto and blockchain firms that SEC Chair @GaryGensler’s information reporting “requests” to the crypto community are overburdensome, don’t feel particularly… voluntary… and are stifling innovation.
Emmer further added that the SEC has every right to obtain info from market participants for the rulemaking process. However, the regulator shouldn’t infringe the standards established in the Paperwork Reduction Act.
The congressman adds that the SEC shouldn’t pit “extra-jurisdictional and burdensome reporting requirements” on crypto startups. The letter forwarded to the SEC has been co-signed by four Democrats and three Republicans. The Congressmen are also members of the bipartisan Congressional Blockchain Caucus.
SEC accused of using the Division of Enformanet to its benefit
In further accusations on the securities regulator, Emmer said that the SEC is using Division of Enforcement and Division of Examination authorities to pressurize crypto and blockchain firms through excessive paperwork. He further adds:
It appears there has been a recent trend towards employing the Enforcement Division’s investigative functions to gather information from unregulated cryptocurrency and blockchain industry participants in a manner inconsistent with the Commission’s standards for initiating investigations.
Other people from the legal space have also joined in support of these Congressmen. Collins Belton, the Managing Partner at emerging technologies legal firm Brookwood, said that he was glad about the issues raised by Emmer.
He further added that the legal privilege had made it difficult for him to publicly express concerns about the SEC. Belton said:
I haven’t been able to discuss much in public as much as I would like to due to privilege issues, but with answers to some of these, I think the public will see just how absurdly broad some of these requests have been.
The regulatory agency has been in the news over its legal battle with Ripple. However, the securities regulator seems to be losing grounds but refuses to back down. Earlier this year, SEC chairman Gary Gensler also warned of strong scrutiny over crypto exchanges.
But now with Congress lawmakers coming in support openly, it will help to boost the morale of the crypto firms operating in the U.S.