The U.S. Securities and Exchange Commission (SEC) is facing increasing calls to reduce its oversight of the cryptocurrency industry, coming from inside and outside the House of Representatives.
The U.S. House of Representatives Financial Services Committee on Thursday voted to appeal Staff Accounting Bill 121, which is effective from March 2022 to prevent banks from acting as custodians of digital assets. When the bill was passed, the SEC claimed that the measure would prevent “significant risks and uncertainties associated with the protection of crypto assets.”
But now there is growing criticism from House committee members about how SAB 121 was enacted.
“The SEC issued SAB 121 without consulting with prudential regulators, experts in bank custody regulation,” said Rep. Mike Flood (R-Nebraska). “That's a pretty significant oversight.”
In October, a Government Accountability Office report examined how SAB 121 was enacted without the SEC submitting a report to Congress and how SAB 121 has since been used as a substitute for more specific regulatory guidance. The question was whether it had been used.
“This guidance was provided to protect investors from mishandling of customers’ crypto assets by custodians, an act that led to the spectacular collapse of FTX that left billions of crypto assets missing. ,” said Rep. Maxine Waters (D-Calif.) in a speech Thursday. House Committee Meeting.
SEC in “Force Only Mode”
But that's not all. Yesterday, 11 U.S. state attorneys general filed a joint amicus brief in a regulatory case challenging the SEC's authority over crypto companies against Payward Ventures, the parent company of cryptocurrency exchange Kraken.
“The SEC's enforcement actions exceed its delegated authority,” the attorneys said in the filing. “Courts should refuse to classify cryptoassets without investment contracts as securities. If the SEC exercises this undelegated authority, state laws tailored to the specific risks of non-securities products , which would put the state's consumers at risk.”
Briefs were filed by the attorneys general of Montana, Arkansas, Iowa, Mississippi, Nebraska, Ohio, South Dakota, and Texas.
That same day, SEC Commissioner Hester Peirce said at an ETHDenver event that regulators were stuck in “enforcement-only mode.” The knock-on effect for developers, she argued, is constant anxiety about what and how to build new technologies that takes them out of the picture.
At yesterday's event, she said: “What I reflect on is the fact that you spend some of your wisdom thinking about how to avoid litigation. If there were clearer rules, you would build I can concentrate on that.''
