A group of Republican lawmakers within the House Financial Services Committee has recently criticized a proposed rule by the Securities and Exchange Commission (SEC), arguing that it would shut down the development of the digital asset industry. The controversial rule could potentially expand the definition of an exchange to include “communication protocol systems,” reaching far beyond centralized exchanges, such as Binance.
The lawmakers highlighted their concerns, stating that the proposed rule would apply to persons acting “in concert” within the scope of digital assets, capturing a wide range of individuals, including software developers and participants in a blockchain network’s consensus mechanism.
Several prominent political figures, such as House Financial Services Chair Patrick T. McHenry, French Hill, Tom Emmer, and Warren Davidson, have signed off on the letter expressing their opposition. Adding another layer of contention is their accusation against SEC Chair Gary Gensler of pushing his personal views on digital assets through this proposal.
Gensler has previously compared decentralized finance (DeFi) exchanges to traditional financial market intermediaries, even if they label themselves differently. Critics argue that the SEC is attempting to front-run Congress, as lawmakers within the House Agriculture Committee are currently working on legislation to regulate digital assets.
Overlapping efforts by both the House Financial Services Committee and the House Agriculture Committee have led to the drafting of crypto regulation legislation. The drafted bill includes measures that classify cryptocurrencies as either security or commodity and proposes regulation for exchanges, among other steps.
During a recent committee hearing, McHenry expressed his intention to hold a vote on the drafted bill by mid-July. He emphasized that the current version of the legislation is only a draft, allowing time for lawmakers to find common ground. The hearing included mention of a markup session for the legislation following the July 4th recess.
While the lawmakers’ letter underscores the potential downsides of the SEC’s proposal, the ongoing efforts by various committees in Congress to regulate digital assets indicate the growing consensus on the necessity of establishing a clear legal framework within the cryptocurrency space. The crypto community, however, must wait to see whether the ultimate outcome will strike a balance between innovation and regulation or if it will lean toward a more restrictive approach that may stifle future development in the industry.
Source: Cryptonews
