The United States Securities and Exchange Commission (SEC) and its Chairman, Gary Gensler, have received a significant wave of criticism from numerous organizations and individuals (including some American politicians) for the way they have treated the cryptocurrency industry over the years.
Ripple’s recent court victory against the Commission prompted even more lawmakers to castigate the regulator. In the next lines, we will name some of the most vocal opponents of the SEC and their reasons.
The Lengthy List of Politicians
United States Representative Warren Davidson was among the first to display his dissatisfaction with Gary Gensler’s anti-crypto campaign this year.
The lawmaker raised his concerns after the SEC announced new rules that could “modernize” the concept of an “exchange” so it could be more closely referred to as a system that “brings together buyers and sellers of securities that offer the use of non-firm trading interest and provide another type of non-discretionary method.”
Davidson claimed this proposal is another example of the agency’s “long series of abuses” toward the cryptocurrency sector. He went further, introducing legislation that could remove the current Chair of the SEC from his post.
Apart from applying enhanced supervision on digital asset exchanges, the watchdog filed lawsuits against two of the behemoths in the industry – Binance and Coinbase. It insisted they had violated certain rules and offered trading services with alleged unregistered securities, such as BNB, BUSD, ADA, SOL, MATIC, and more.
Senator Cynthia Lummis (a keen proponent of bitcoin and even a HODLer) was quick to react to that move. She believes the SEC had failed to provide “a path” for crypto marketplaces and did not offer “adequate legal guidance on what differentiates a security from a commodity.” She also scolded the agency for the lack of comprehensive crypto rules in the USA, which could push the industry offshore or “into the shadows.”
The SEC was involved in the cryptocurrency space again in mid-June when multiple finance giants, including BlackRock, filed with it to release a spot BTC ETF in the States. The Commission was initially unsupportive of the idea of such monetary products, calling the applications “inadequate.”
US Congressman Patrick McHenry opposed the SEC’s vision, maintaining that the only reason Gensler would be against spot BTC ETFs is “if he wants to kill crypto” in America.
The Effect of Ripple’s Victory
One groundbreaking event for the entire cryptocurrency field was Ripple’s recent court win against the SEC. A US judge ruled in favor of the enterprise blockchain provider in mid-July, stating that most XRP sales do not constitute securities transactions.
The regulator filed its lawsuit against Ripple more than three years ago, alleging the entity’s native token should be treated as a security, similar to bonds or stocks, and therefore it should become subject to SEC regulation. Interestingly, Gensler has claimed over the past few years that the only digital currency with the status of a commodity is bitcoin.
Representative Ritchie Torres wrote a letter a few days after Ripple’s landmark victory, claiming that the SEC (under the rule of Chair Gensler) has failed to issue “a single rule on crypto assets, nor has it given any clear guidance.” He also asked whether the watchdog will end its war on the industry following its court loss.
Senator Lummis was once again vocal on the topic, opining that the outcome of the Ripple vs. SEC legal battle has “reinforced the need for Congress to create a regulatory structure for crypto assets.” She pointed out the bill, introduced by her and Senator Kirsten Gillibrand, which aims to categorize most digital currencies as commodities (or in the same bracket as gold, silver, oil, and natural gas).
Last but not least, US Representative Dusty Johnson argued in a recent statement that Gensler’s “consistent efforts to project an air of certainty” in the crypto sector and outline that almost every digital asset is a security were put to the test by the result of the case against Ripple.
The lawmaker believes the court ruling was a double-edged sword since it damaged Gensler’s approach to the industry and created even bigger confusion. He concluded that the only solution to that problem is the implementation of crypto legislation coming from Congress.