Cryptocurrency and stablecoin regulation has remained controversial in the digital asset space, particularly in the United States. The regulatory body, the U.S. Securities and Exchange Commission (SEC), is considered by stakeholders within the crypto ecosystem to be adversarial in its approach.
For its role in crypto market oversight, there is an ongoing hearing between the SEC’s top leaders and members of the Financial Services Committee of the US Congress.
Congressman Emmer Challenges SEC’s Approach
In the congressional hearing, U.S. Congressman Tom Emmer interrogated U.S. SEC Chair Gary Gensler on the inconsistencies that have characterized crypto regulation.
Notably, Emmer highlighted Gensler’s inconsistencies in regulating stablecoins. The lawmaker stated that the SEC had instituted multiple court cases and confused the digital asset marketplace.
Congressman Emmer grilled the SEC Chair on the commission’s arbitrary handling of the crypto ecosystem. He accused Gensler of concocting a new term, “crypto asset security,” just to target a segment of the digital asset ecosystem. Rep Emmer insisted that the term cannot be found in statute and is just a guise to target crypto entities.
The Republican Congressman expressed concerns over Gensler’s lack of clarity in handling his crusade against the crypto industry. He also voiced his displeasure with the regulatory body’s abuse of enforcement tools.
“Your inconsistencies on this issue have sent this country back. We could not have had a more historically destructive or lawless Chairman of the SEC,”
Emmer concluded.
Is Stablecoin Legislation on the Horizon?
More clarity is still needed as to what constitutes securities. While firms like Uniswap have received SEC Wells Notices, stablecoin issuers like TrueCoin have also settled charges with the SEC. The assets associated with these firms are considered securities, with no exception for stablecoins.
Like the TrueUSD issuer, the U.S. SEC has gone after different crypto entities, with some legal cases still in court. The three-year legal battle between the SEC and Ripple Labs remains a dark cloud hovering over the firm and XRP. The Gensler-led SEC accused Ripple Labs of selling XRP as an unregistered security.
Although the court fined the Ripple Labs $125 million, uncertainty persists about the regulator’s next move. A notable concern for stakeholders in the crypto space is the redefinition of what constitutes security by the SEC’s standard.
Experts consider Gensler’s approach to regulation as hostile to the growth of new technologies in general.
The SEC’s stance on stablecoins has also attracted the attention of Maxine Waters of the House Financial Services Committee. Addressing the committee Chair, Patrick McHenry, Waters stated a bill to provide a clear regulatory framework should be available before the end of the year.
McHenry has expressed his optimism about stablecoin legislation, stating that he also wants “clarity when it comes to digital assets generally.”
Evolution of Crypto Regulation
Although cryptocurrency has existed since 2009, governments and regulators across the globe have been slow in evolving rules to govern its use.
Some countries, like Brazil and Hong Kong, have made significant progress, with clear rules governing the industry and players. Others, such as China, have banned crypto outright, while the United Kingdom recognizes crypto assets as regulated financial instruments.
In the U.S., the Commodity Futures Trading Commission (CFTC) classified Bitcoin as a commodity in 2015.
The SEC vs. Ripple lawsuit, which commenced in 2020, has led to the ongoing debate about whether cryptocurrencies should be classified as securities or commodities.
Another notable milestone is President Joe Biden’s signing of an Executive Order to ensure the responsible development of digital assets. Despite these good intentions toward crypto regulation, the administration has fallen short.
With the November Presidential election in the U.S. fast approaching, crypto regulation has gained prominent attention. Moving on, many stakeholders anticipate better handling of regulatory oversights from the SEC, especially if there is a change in its leadership structure.
