A US legislator has recently expressed concerns regarding the potential ramifications of granting crypto businesses provisional registration within a proposed regulatory framework. Representative Maxine Waters suggested that “bad actors” in the crypto industry be rewarded with a “get out of jail free” pass.
During a United States House Financial Services Committee meeting, members deliberated on the need for clarity in the digital asset ecosystem. They cited recent Securities and Exchange Commission (SEC) litigation proceedings against cryptocurrency firms.
Moreover, these discussions occurred amidst growing concerns and regulatory challenges in the cryptocurrency industry. Rep. Maxine Waters stressed Democrats’ scrutiny of the GOP’s regulatory proposal during the June 13 committee hearing.
Committee Chair Patrick McHenry expressed his expectation of receiving bipartisan input on a draft bill. The bill would undergo further revisions following a congressional recess in July. Waters voiced her apprehension: without extensive analysis and collaboration between political parties.
The proposed digital asset legislation could inadvertently facilitate fraud and the misuse of customer funds. To support her stance, she referred to instances such as the collapse of FTX and criminal charges against former FTX CEO Sam Bankman-Fried. She also mentioned the SEC’s recent actions against prominent crypto exchanges Binance and Coinbase.
“I’m distraught that the Republican bill would allow crypto firms currently being sued for violating our securities laws to continue doing business through provisional registration,” expressed Waters. The bill seemingly shields crypto firms from SEC enforcement, even in fraud cases,” she remarked.
This provisional registration could reward bad actors with a ‘get out of jail free’ card and allow them to continue harming consumers and investors.” The draft bill, introduced on June 2, seeks to prevent the SEC from rejecting digital asset trading platforms as regulated alternative trading systems.
#TODAY @ 10 AM – RM @RepMaxineWaters leads Democrats as the full Cmte holds a hearing entitled “The Annual Testimony of the Secretary of the @USTreasury on the State of the International Financial System.”
— U.S. House Committee on Financial Services (@FSCDems) June 13, 2023
Furthermore, it would permit such firms to offer “digital commodities and payment stablecoins.” The plan aims to revamp SEC and CFTC roles, overseeing U.S. digital assets and bringing reforms to their duties. Prometheum’s co-CEO Aaron Kaplan stressed SEC’s role in enforcing federal securities laws during the committee hearing.
He stressed the importance of protecting the welfare of the American populace. Kaplan advocates enforcing regulations in light of recent incidents involving FTX, Binance, and Coinbase for a better way forward.
Diverse Reactions To SEC’s Regulation-by-Enforcement Approach
While Rep. Waters expressed her concerns about the potential consequences of the SEC’s regulatory approach, other lawmakers have responded differently. Ohio Representative Warren Davidson, a Republican House Financial Services Committee member, recently proposed legislation.
The legislation aims to remove SEC Chair Gary Gensler from his position. He suggested a restructuring of power within the commission. The legal feasibility of this proposed measure remains uncertain.
In a separate development, Binance.US has resisted the SEC’s attempts to freeze its funds amid ongoing lawsuits. A federal judge in Washington, D.C., is considering motions from the SEC, Binance, and Binance. U.S. regarding the handling of assets and other pending legal actions.
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Discussions continue in the United States Congress regarding the proposed regulatory framework. The outcome of these discussions and its impact on the crypto industry remain uncertain. The matter is now the individual of intense debate and speculation.