- The SEC is drawing attention from more than just crypto companies.
- Rep. Davidson is filing legislation to try and fire SEC chair Gensler and restructure the organization.
- The SEC has been criticized for its unrestricted enforcement over the crypto space since FTX fell in November 2022.
SEC chairperson Gary Gensler has raised the hackles of the crypto community once again as his governmental agency is attempting to redefine what an ‘exchange’ is to broaden its jurisdiction, as outlined in an April 14 statement. But not just the crypto community views this as an overreach.
United States Representative Warren Davidson has taken aim at Gensler by introducing legislation to remove the chairman while restructuring the role to have an Executive Director that reports to a Board rather than an all-powerful chairman.
Davidson was responding to a tweet from Coinbase’s legal chief, Paul Grewal, and began by saying he was looking to “correct a long series of abuses.”
Regulation by Enforcement
The regulatory landscape in the U.S. has turned remarkably hostile since the collapse of FTX in November 2022. The SEC, and its chair Gensler, have been at the heart of the crypto crackdown, with high-profile cases against Ripple and Coinbase making the headlines.
The SEC took aim at Ripple in a groundbreaking case in 2020 where the regulator accused Ripple Labs and its executives of conducting an unregistered security offering by selling XRP tokens to investors during their ICO.
However, more recently, the SEC has stretched its jurisdiction to demand Paxos stop minting the BUSD stablecoin and fined Kraken for its staking services, also putting a stop to it. The sweeping enforcement backed by securities law not entirely made for crypto has caught the ire of crypto firms and U.S Representatives alike.
Davidson, Peirce, and the Gensler Hearing
Davidson appears to be moving proactively to remove Gensler and restructure the SEC. A congressional hearing is also set for Gensler on April 18, where he will be called to answer questions on his regulation of the crypto ecosystem.
Hester Peirce – aka ‘Crypto Mom’ – has been campaigning against the hardline SEC approach to crypto. She also weighed in on the new proposed rule amendments in the latest SEC statement, stating “stagnation, centralization, expatriation, and extinction are the watchwords” of the latest move from the SEC.
On the Flipside
- Gensler maintains that he has been clear and transparent with his enforcement and that crypto companies are choosing not to be compliant as ”regulations already exist.”
Why You Should Care
The SEC has had unrestricted rule over the crypto space for an extended period and has used FTX’s failure to control the ecosystem further. However, the body is now facing a backlash from several different sources.
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