Wyoming Senator Cynthia Lummis, a digital asset advocate, has criticized the U.S. Securities and Exchange Commission’s (SEC) handling of cryptocurrency regulation. Speaking on CNBC’s Squawk Box, Lummis criticized SEC Chairman Gary Gensler for his attitude towards the cryptocurrency market, calling it counterproductive and problematic.
Senator Cynthia Lummis criticizes US SEC crypto regulation
During the interview, the senator pointed out that the US crypto industry has many problems, which are only being accentuated by the SEC’s current tactics. Lummis took aim at SEC Chairman Gary Gensler for his approach to regulating the industry, which she said involved the use of enforcement measures instead of clear guidelines.
She pointed out that this has led to a lot of uncertainty, with many digital asset companies finding themselves mired in legal disputes instead of being offered clear rules to follow.
According to Senator Cynthia Lummis, the SEC has posed a significant obstacle to the future development of the cryptocurrency sector despite the need for regulatory certainty. She pointed out that the current legal framework is insufficient and unable to keep up with progress, especially considering the EU passed a comprehensive set of crypto laws in 2023. Lummis noted that the United States could lose their position in the global financial services market. if these regulatory gaps are not closed as quickly as possible.
“Crypto Assets Should Be Subject to CFTC Oversight”
Lummis also addressed the digital asset category and shared his view that Bitcoin and Ethereum are commodities and should fall under the jurisdiction of the CFTC rather than the SEC.
She noted that the SEC’s strategy, which tends to categorize digital assets as securities, does not apply to decentralized cryptocurrencies such as Bitcoin and Ethereum.
Senator Cynthia Lummis also emphasized that Congress should step up its efforts and propose appropriate legislation that would define the scope of action of different agencies regarding digital assets. She noted that while some assets may still be regulated by the CFTC, there is a need for a clear and current framework for market regulation. She also pointed out that the Howey test, which is a legal test applied to determine whether an asset can be considered a security, might need updating given current developments in the crypto market.
Gary Gensler’s position on BTC and ETH
Unlike Senator Cynthia Lummis, SEC Chairman Gary Gensler maintained that the United States already has crypto regulations in place. During an interview, Gensler responded to criticism from industry players, saying that “not liking rules is not the same as not there being any.”
He insisted that the SEC is focused on investor protection, noting that many crypto companies have benefited from public interest in digital assets without providing proper disclosures.
Gensler has claimed that Bitcoin is not a security, a position shared by his predecessor Jay Clayton. This distinction, Gensler noted, allowed the SEC to approve the launch of Bitcoin Spot Exchange-Traded Funds (ETFs) earlier this year. However, Gensler has remained largely silent on Ethereum’s classification, although its treatment as a commodity has been inferred from regulatory decisions regarding Ethereum ETFs.
Lummis calls for changes in crypto regulation
According to the Wyoming senator, these gaps can only be filled through legislation. She cited her plan with Sen. Kirsten Gillibrand to change the wash sale rule to increase the CFTC’s funding and ability to regulate the digital asset space.
This proposal, she said, would allow for a more comprehensive approach to regulating the crypto space without compromising its potential.
Additionally, Senator Cynthia Lummis and a number of other lawmakers have also expressed concerns about the SEC’s Staff Accounting Bulletin 121 (SAB 121), which requires cryptocurrency custodians to include client assets in their passive. In a letter to Gensler, the lawmakers called for SAB 121 to be withdrawn, saying it imposed unwarranted regulatory restrictions on the crypto industry.
Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in cryptography and finance, holding a bachelor’s degree in actuarial science. Known for his incisive analysis and insightful content, he has a strong command of English and excels in conducting in-depth research and providing timely updates on the cryptocurrency market.
Disclaimer: Content presented may include the author’s personal opinion and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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