Crypto-friendly Rep. Tom Emmer, R-Minn., criticized Securities and Exchange Commission Chair Gary Gensler for being “as ineffective as he is incompetent” — introducing an amendment to “rein in enforcement abuses” against the crypto industry.
Rep. Emmer leads the Congressional Blockchain Caucus, which is favorable toward crypto and believes in a light-touch regulatory approach. He dropped out of the House Speaker race just hours after winning the nomination last month.
The nonpartisan amendment passed the House yesterday with no opposition and seeks to prevent the SEC from using funds for crypto enforcement until Congress defines its regulatory scope.
Emmer’s initiative reflects a growing concern over the SEC's current "regulation by enforcement" approach, which has been criticized for stifling innovation and forcing companies to seek friendlier shores.
“Regulation by enforcement is a practice all too common with this administration. This is particularly the case at the SEC and Chair Gary Gensler’s approach towards our capital markets and financial services industry, but especially with our emerging digital assets community. My amendment seeks to put an end to Chair Gensler’s pattern of regulatory abuse, a pattern that is crushing American innovation and capital formation, without undermining our ability to go after criminals and fraudsters,” Emmer said during a session of Congress yesterday.
“Specifically, my amendment prohibits the SEC from using funds for enforcement activities related to digital asset transactions until Congress passes legislation that gives the SEC jurisdiction over this asset class. This will keep Chair Gensler — who has proven himself to be ineffective and incompetent — in check while Congress continues working to give this industry a chance to grow and develop right here in the United States,” he added.
Going after Kim Kardashian and Coinbase, missing SBF and FTX
The Congressman pointed to a pattern of aggressive SEC actions against crypto entities, like the U.S. publicly traded Coinbase, without providing clear regulatory guidelines — something he argues harms American competitiveness in the digital asset arena. “How can this industry comply if there are no rules or guidelines to follow,” he asked, adding: “Gensler has done this while missing the bad actors, like FTX and Terra/Luna.
Yesterday, Gensler told CNBC at DC Fintech Week a rebooted FTX run by ex-NYSE chief Tom Farley would be possible if done “within the law.”
“At a time when clear guidance is desperately needed, Chair Gensler instead spends taxpayer resources praising himself for targeting celebrities like Kim Kardashian while Sam Bankman-Fried was running a Ponzi scheme right under his nose,” the Congressman continued, adding that the SEC doesn’t have jurisdiction over the asset class to begin with.
“The unique characteristics of digital assets make it hard to fit this asset class into any existing regulatory framework. That doesn’t mean crypto is up for grabs by whatever federal bureaucratic agency has the most taxpayer-funded enforcement resources to burn. Congress is working on legislation to establish a framework for how we classify specific digital assets, as a security or a commodity, which will dictate the regulator of jurisdiction,” he said.
'Congress will hold unelected bureaucrats accountable'
The Majority Whip also highlighted the SEC’s enforcement action against Ripple, The United States Court of Appeals for the District of Columbia Circuit finding the SEC to be acting “arbitrarily and capriciously” in its refusal to approve Grayscale’s bitcoin spot ETF application, and the Government Accountability Office finding the SEC to have created an illegal crypto accounting rule as examples of the agency operating outside of its jurisdiction.
Emmer said the Department of Justice, the Treasury and the Office of Foreign Asset Control all have sufficient authority to prosecute criminal acts of fraud, abuse, tax or sanctions evasion — adding that some argue they have done a better job in dealing with criminal activity in the space than Chair Gensler and the SEC.
“This amendment is designed to send an important signal – not just to the SEC but to every regulatory entity in the federal government – Congress will hold unelected bureaucrats accountable,” he said.
The amendment will now be sent to the Senate for consideration. The Senate can agree to the House amendment, propose its own amendments, or pass a different version.
The SEC did not immediately respond to a request for comment from The Block.
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