The approach of the SEC Chair to crypto regulation is criticized by Senator Cynthia Lummis, who advocates for establishing clear rules and properly classifying assets.
Cynthia Lummis, a Wyoming Senator and digital asset proponent, has expressed dissatisfaction with the US SEC cryptocurrency regulation. Lummis criticized SEC Chair Gary Gensler for his attitude toward the cryptocurrency market during an appearance on CNBC’s Squawk Box, stating that it was counterproductive and problematic.
Senator Cynthia Lummis Criticiques US SEC Regarding Crypto Regulations
The Senator emphasized during the interview that the US crypto industry is plagued by numerous issues further exacerbated by the SEC’s present strategies.
Lummis criticized SEC Chairman Gary Gensler for his regulatory strategy, which she claimed relied on enforcement actions rather than explicit guidelines.
She noted that this has led to significant uncertainty, with numerous digital asset companies becoming embroiled in legal disputes rather than being provided with clear regulations to adhere to.
The SEC has been a substantial impediment to the continued development of the cryptocurrency sector, as per Senator Cynthia Lummis, despite the necessity for regulatory certainty.
The current legal framework is inadequate and unable to keep pace with the progress, particularly in light of the EU’s adoption of a comprehensive set of crypto laws in 2023, as she noted.
Lummis observed that the United States may be compelled to relinquish its global financial services market position if these regulatory deficiencies are not rectified promptly.
CFTC should be responsible for overseeing crypto assets
Lummis also addressed the category of digital assets and expressed her conviction that Bitcoin and Ethereum are commodities and should be subject to the CFTC’s jurisdiction rather than the SEC’s.
She observed that the SEC’s strategy, historically classifying digital assets as securities, does not apply to decentralized cryptocurrencies like Ethereum and Bitcoin.
Senator Cynthia Lummis also emphasized the need for Congress to take action and develop appropriate legislation defining various agencies’ authority over digital assets.
She observed that, even though the CFTC can still regulate certain assets, it is imperative to establish a concise and up-to-date framework for market regulation. She also noted that the Howey Test, a legal test used to determine whether an asset qualifies as a security, may necessitate an update in light of the current developments in the crypto market.
Gary Gensler’s Position on Bitcoin and Ethereum
SEC Chair Gary Gensler has maintained that the United States already has crypto regulations, unlike Senator Cynthia Lummis. During an interview, Gensler refuted criticism from industry stakeholders, contending that “disliking the rules is not the same as there being no rules.”
He emphasized that the SEC is committed to safeguarding investors, pointing out that numerous crypto firms have benefitted from the public’s interest in digital assets without providing adequate disclosures.
Gensler reiterated that Bitcoin is not a security but a position his predecessor, Jay Clayton, also held. Gensler observed that this distinction enabled the SEC to authorize the introduction of Bitcoin Spot Exchange-Traded Funds (ETFs) earlier this year.
Nevertheless, Gensler has maintained a relatively low profile relative to Ethereum’s classification, although its treatment as a commodity has been inferred from regulatory decisions concerning Ethereum ETFs.
Lummis Urges Changes to Cryptocurrency Regulation
According to the Wyoming Senator, these gaps can only be resolved through legislation. She referenced her collaboration with Senator Kirsten Gillibrand to modify the wash sale rule to augment the CFTC’s funding and its ability to regulate the digital asset sector.
She stated that this proposal would enable a more comprehensive approach to regulating the crypto space without compromising its potential.
Furthermore, Senator Cynthia Lummis and numerous other legislators have also expressed apprehension regarding the Staff Accounting Bulletin 121 (SAB 121) of the Securities and Exchange Commission (SEC), which mandates that crypto custodians include customer assets as liabilities.
Legislators requested that SAB 121 be rescinded in a letter to Gensler, asserting that it imposes excessive regulatory constraints on the cryptocurrency industry.
