Congressmen Warren Davidson, Tom Emmer, Ted Budd, Anthony Gonzalez, and Trey Hollingsworth have written to the US SEC Chair, requesting clarification on crypto regulations.
The news follows a Bloomberg piece that discussed the SEC’s “significant jurisdiction” over tokens like Tether. It had suggested, citing sources, that the US Treasury’s next regulatory report will establish the SEC‘s overriding power in the industry.
As a result of this, Davidson remarked,
“The crypto industry deserves regulatory clarity when it comes to yield products and stablecoins.”
He went on to say that he’s requesting this clarification from the SEC in order for innovation to thrive in the United States.’
The SEC chair has previously advocated for greater investor protection in the DeFi ecosystem. It resulted in a slew of industry crackdowns, including the cancellation of Coinbase’s crypto Lend program and an investigation into stablecoins. Other cryptocurrency companies, such as Celsius Network and BlockFi Inc., were also on the watchdog’s radar for similar deals.
Congressman Emmer had argued in this context that Gensler “believes that almost all tokens are security,” and that he “adamantly disagrees.”
As a result, the Members of Congress have written a letter requesting “additional information on the SEC’s interpretation of existing case law.” They’re looking for information on asset-backed stablecoins and crypto yield products in particular.
They cite previous case laws such as Marine Bank v. Weaver and Reves v. Ernst & Young in their quest for clarity and to avoid ‘innovation-stifling uncertainty.’
It’s worth noting that the Reves case is frequently cited when determining whether a transaction involves a “security.” According to crypto lawyer Byrne, the Supreme Court in the case of Marine opined that the definition of “security” is context-dependent.
Having said that, the above-mentioned Members of Congress anticipate a written response from Gary Gensler on the following key issues by ‘no later than November 19, 2021′:
- What type of bank and bank-like regulations under the Reves case would remove the need to apply the securities law while issuing stablecoins or yield products.
- What aspect of the regulations, that include rules like permissible investment standards and minimum capitalization, is sufficient to protect investors. Conversely, if any aspect of the existing framework is insufficient for investor protection.
Meanwhile, the interim chairman of the Commodity Futures Trading Commission, Rostin Behnam, recently indicated that the commodities regulator should be the primary watchdog for cryptocurrency. As a result, the next regulatory report, as well as the SEC’s response to Congress, should be closely monitored.
