Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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Spending Bill vs. SEC’s Crypto Grip
Regulation | Nov 9, 2023
Image: Pexels/Crypto Crow
The U.S. House of Representatives has introduced a provision in the spending bill that could curtail the SEC's enforcement capabilities against crypto businesses.
This legislative maneuver aims to restrict the SEC's funding for enforcement actions against crypto businesses, a move that underscores the ongoing tension between regulatory bodies and the evolving crypto sector.
The amendment, spearheaded by Majority Whip Tom Emmer (R-Minn.), a well-known advocate for the crypto industry, targets SEC Chair Gary Gensler's enforcement-centric approach. Emmer's critique of Gensler's tactics as ineffective and overreaching reflects a broader sentiment that policy, not punishment, should guide the evolution of the crypto landscape. The Financial Services and General Government Appropriations Act of 2024, which houses this amendment, received a voice vote approval among more than 100 proposed amendments.
See: SEC Chair Gensler’s Mixed Feedback at Senate Hearing
Emmer's floor statement was unequivocal:
"My amendment prohibits the SEC from using funds for enforcement activities related to digital asset transactions until Congress passes legislation that gives the SEC jurisdiction over this asset class."
He further went onto say:
Under Gensler’s leadership, the SEC has pursued dozens of enforcement actions against the digital asset industry despite never finalizing a single rule or regulation for the industry to follow. Chair Gensler refuses to provide the marketplace with clear criteria for digital assets that he would consider to be a security. How can this industry comply if there are no rules or guidelines to follow?
See: FTX’s Possible Comeback Under Legal Scrutiny by Gensler
These statements not only challenges the SEC's current trajectory but also highlights the legislative body's intent to foster a conducive environment for crypto innovation in the United States.
Bipartisan Support Required
However, the bill's journey is far from over. It requires the Senate's endorsement, where Democrats, who are generally more aligned with Gensler, hold sway. The Senate Banking Committee Chairman Sherrod Brown (D-Ohio) and others have expressed support for Gensler's enforcement actions against crypto firms. The legislative path forward will require bipartisan cooperation to balance the need for consumer and investor protection with the industry's growth.
This legislative development arrives amidst a backdrop of heightened scrutiny and regulatory actions by the SEC, with Gensler affirming the pursuit of as many as 150 actions against crypto firms. The Congress faces a looming budget impasse, with temporary funding set to deplete by November 17, adding to the urgency and complexity of the situation.
See: SEC Drops Charges Against Ripple Execs: Crypto Regulation Shifts
Reshaping Future Policy
The implications of this legislative effort could reshape the balance of power between the crypto industry and regulatory bodies, and set the stage for future policy development in the digital asset space.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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