“Cryptocurrency companies don’t offer securities,” U.S. lawmaker writes to SEC chairman

Criticizing SEC’s cryptocurrency regulations

US House Financial Services Committee Chairman Patrick McHenry (Republican) announced on the 18th that he has sent a letter to SEC Chairman Gary Gensler.

The letter was sent to all Republicans on the House Financial Services Committee on the initiative of McHenry. Lawmakers have criticized the SEC’s regulatory actions on digital assets such as cryptocurrencies and urged Gensler to work with Congress. He called for clarity on the regulatory rules for digital assets to promote both innovation and investor protection.

Mr. Gensler was scheduled to attend the hearing of the House Financial Services Committee on the 18th local time, but sent this letter before that. Gensler accuses digital asset trading platforms of forcing business registration without providing a workable process.

He said he believes the SEC’s regulatory framework is not compatible with digital asset technology and cannot be applied. The reason, he argued, is that “the activities of digital asset companies do not include the provision of securities.”

It is also not clear which digital assets qualify as securities. It held that the SEC itself was responsible for the failure of digital asset companies to register as businesses. It also argues that the SEC’s approach thwarts the benefits of new technology, harming consumers, investors and even the economy.

The letter was signed by 29 lawmakers. “I look forward to continuing the discussion on this important issue,” he concluded.

Mr. Gensler’s claim

Gensler, on the other hand, has argued that the regulation of cryptocurrencies is clear. He has argued that the majority of cryptocurrencies fall under the category of securities, and that regulations on cryptocurrencies are already clear because securities laws are in place.

During the hearing, Chairman McHenry asked Gensler whether Ethereum (ETH) was a security or not, but Gensler avoided a clear answer.

connection: US SEC Chairman Gensler mentions virtual currency in congressional testimony Answers questions on securities law

Recently, the SEC has accelerated regulatory enforcement actions in line with this view. On the 17th, it announced that it had sued the cryptocurrency exchange Bittrex for providing securities trading, brokerage and clearing services to U.S. investors without business registration.

connection: U.S. SEC sues virtual currency exchange Bittrex, claiming securitization of 6 stocks

In this announcement, as an example, 6 stocks are claimed as securities. “This lawsuit once again makes clear that the cryptocurrency market is not lacking in regulatory clarity, but in compliance,” said Gensler.

connection: What is the Howey test that determines whether a virtual currency is a “securities”?

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