Two members of the US House of Representatives have voiced their concerns about the SEC Chair Gary Gensler’s approach to digital asset regulation.

Reps. French Hill and Dusty Johnson believe that legislative measures would be more effective in addressing regulatory issues related to cryptocurrencies. This is compared to the SEC’s current enforcement-focused strategy.

The lawmakers emphasized the importance of establishing a statutory framework in a letter to Gensler dated July 19. This is to prevent future collapses of digital asset firms and protect consumers.

A Call for Legislative Action

Reps. French Hill and Dusty Johnson, chairs of key subcommittees in the House Financial Services Committee and House Agriculture Committee, respectively, have proposed a legislative approach to tackle crypto regulation.

They argue that legislation offers a more proactive and preventive solution. This is rather than relying solely on enforcement actions to punish wrongdoers after the damage has already been done. The goal is to create a regulatory framework that allows firms to comply with consumer protections and operate within clear guidelines.

Timing of SEC Actions Under Scrutiny

Gravel with Bitcoin logo for crypto regulation

Hill and Johnson have raised concerns about the timing of certain SEC actions. They suggested that they were deliberately coordinated with related Congressional activity for maximum publicity and political impact.

Notably, the SEC’s charges against former FTX CEO Sam Bankman-Fried came just before his scheduled testimony before the House Financial Services Committee in December 2022. Such timing has raised eyebrows among other members of Congress as well.

Reevaluating the Ripple Ruling

The lawmakers also referenced a recent summary judgment, likely referring to the SEC v. Ripple case, which indicated that XRP may not necessarily be classified as a security. This ruling has prompted other House representatives to call on SEC Chair Gensler to reconsider the SEC’s current approach to regulating cryptocurrencies.

However, Gensler expressed disappointment with the court’s decision. This was due to its potential impact on retail investors, and the SEC is now evaluating the situation.

Market Structure Bill in the Works

Lawmakers within the House Financial Services Committee are currently drafting a market structure bill. This bill aims to clarify the roles of the SEC and Commodity Futures Trading Commission in regulating cryptocurrencies.

Furthermore, the bill is intended to provide more clarity and consistency in the regulatory landscape for digital assets. Before the bill is officially introduced, it will be subject to feedback from fellow lawmakers and industry leaders. Also, possible amendments may be made to ensure its effectiveness.

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