The Republicans leading the House Financial Services Committee penned a letter critiquing SEC’s interpretation of exchange would impede innovation in the US.
The move by Republicans illustrates that the Grand Old Party is yet to relent in its defense of the digital assets industry.
Republicans Urge SEC to Rescind Recent Definition of Exchange
The Republicans within the House Financial Services Committee (HFSC) urged the Garry Gensler-led Securities and Exchange Commission (SEC) to consider rescinding how it defines exchange.
The letter penned by the Republican lawmakers decried that the proposed rule has the potential to hinder innovation. The letter laments that approving the proposed version would significantly hurt the participants in the digital assets space. The US economy would suffer the greatest casualty as it would prompt an exodus of innovation to other crypto-friendly jurisdictions.
The letter questions SEC’s proposals in 2022 to redefine exchange to read systems that utilize non-firm trading interests. Besides, the watchdog seeks the inclusion of communication protocols that assemble securities’ buyers and sellers.
Republicans Warn Against Extending SEC’s Mandate Outlined in Securities Exchange Act
Republicans claim that approving the proposals would extend SEC’s mandate beyond the intended extent by the Securities Exchange Act. In particular, the proposals would empower SEc to terminate the development of projects within the digital asset ecosystem. By doing so, the US would suffer stagnant technology innovation.
The letter penned on Tuesday, June 13, echoes Republicans’ stance of blasting the SEC for the abrasive treatment of the cryptocurrency industry. Previously, Republican-aligned commissioner Hester Peirce in the SEC criticized SEC’s aggressive conduct as demonstrating disinterest in nurturing innovation. He added that its onslaught on various crypto exchanges and projects appears to stifle competition, thereby protecting incumbents.
Republicans Question SEC’s Move to Compel Crypto Embrace Unsuitable Regulatory Framework
Republicans had, in their May letter, accused the SEC chair Gensler of compelling the crypto assets ecosystem to embrace an unsuitable regulatory framework.
The letter defending the crypto industry faults SEC for deploying regulation by enforcement. The criticism arises from the crackdown on several crypto brands, including Ripple, Nexo, Kraken, Bittrex, and Gemini. Binance and Coinbase are the recent victims bearing the aggression of the SEC when it filed charges against the duo citing noncompliance with the Securities Exchange Act provisions.
SEC caused shockwaves across the entire digital assets industry when it initiated a suit against Binance and, a day later, Coinbase. A scrutiny of the documents submitted by the SEC while suing Binance captures serious allegations against the top-ranked crypto exchange by transaction volume. In particular, SEC accused Binance as a platform run through the deceptive web by Changpeng Zhao and commingling clients’ funds.
The regulator would on Tuesday submit that the leading crypto exchange in the US, Coinbase, is running an unlicensed securities exchange and compromising investors’ interests to prioritize its profits.
Revisiting Charges Lodged Against Coinbase and Binance
SEC claims that Zhao oversaw the commingling of customers’ crypto and fiat. The allegations are reminiscent of accusations levied against its bankrupt rival FTX. Unlike the criminal charges levied against the embattled FTX chief Sam Bankman-Fried, SEC preferred civil charges against Binance and Zhao.
In a review of the SEC’s filing in the suit against Coinbase, the regulator accuses the Brian Armstrong-led firm of operating without necessary registration to offer brokerage, clearance, and exchange services.
The regulator submitted that the San Francisco-based company offered unregistered securities for purchase to US residents. Unlike Binance, SEC indicates that Coinbase commingled functions contrary to the provisions enshrined in the federal laws that are separated within conventional securities markets.
Besides the lawsuits, the regulator signaled unwelcoming conduct in the digital asset sector. It dismissed additions of digital currency, claiming the industry is founded upon noncompliance.
Republicans are pointing out the harsh stance as one illustrating it is overstepping its mandate. They lament that the aggression is pushing crypto companies to other countries they consider receptive to crypto operations.
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