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(Kitco News) - The pushback against the U.S. Securities and Exchange Commission’s (SEC) heavy hand in the crypto market escalated on Monday as lawmakers in the House of Representatives filed a new bill intended to remove Gary Gensler as the Chair of the SEC and institute a restructuring of the financial regulator.
The bill, titled the SEC Stabilization Act, was introduced to the House by Rep. Warren Davidson (R-OH) and House Majority Whip Tom Emmer (R-MN).
“U.S. capital markets must be protected from a tyrannical Chairman, including the current one,” Davidson said in a statement posted on Twitter. “That’s why I’m introducing legislation to fix the ongoing abuse of power and ensure protection that is in the best interest of the market for years to come. It’s time for real reform and to fire Gary Gensler as Chair of the SEC.”
Davidson first revealed his intention to introduce the bill earlier this year in response to a tweet by Coinbase legal chief Paul Grewal.
According to Davidson, the bill recommends that the SEC remove the Chair position and instead appoint an “executive director” to oversee day-to-day operations. The bill also proposes adding a sixth SEC commissioner as a way to help redistribute power from the chair to other commissioners with staggered six-year terms.
Under the rules outlined in the bill, commissioners would still have rulemaking, investigative and enforcement authority, but the new measures would help prevent any political party from controlling more than three seats on the commission, and would implement a structure similar to the Federal Elections Commission (FEC).
“American investors and industry deserve clear and consistent oversight, not political gamesmanship,” said Rep. Tom Emmer. “The SEC Stabilization Act will make common-sense changes to ensure that the SEC’s priorities are with the investors they are charged to protect and not the whims of its reckless Chair.”
U.S. lawmakers have been more vocal in their pushback against Gensler, the SEC and central bank digital currencies in recent months as the issues have entered mainstream dialog.
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| U.S. lawmakers and crypto firms push back against SEC ‘regulation by enforcement' |
During a hearing last week in front of the House Agriculture Committee, several lawmakers, including Committee Chair Glenn Thompson (R-PA), pushed back against the SEC's recent bout of enforcement actions targeting some of the largest players in the U.S. crypto space.
“Regulation by enforcement is not an appropriate way to govern a market, adequately protect customers or promote innovation,” Thompson said during his prepared remarks.
After the SEC’s lawsuits were filed last week, Senator Cynthia Lummis (R-WY) admonished the regulator, saying “The SEC has failed to provide a path for digital asset exchanges to register, and even worse has failed to provide adequate legal guidance on what differentiates a security from a commodity. The SEC’s continued reliance on regulation by enforcement continues to harm consumers.”
Lummis went on to note that the SEC’s failure to provide a clear regulatory framework is the issue at the heart of this situation, and if they don’t act to change that, the crypto industry will eventually abandon the U.S. for more welcoming jurisdictions.
“Real consumer protection requires creating a robust legal framework that exchanges can comply with, not pushing the industry offshore into the shadows,” Lummis said. “This is why Congress needs to pass the Lummis-Gillibrand Responsible Financial Innovation Act.”
Senator Bill Hagerty (R-TN), a member of the Senate Appropriations, Banking, and Foreign Relations Committees, also railed against the actions of the SEC, tweeting on Tuesday that the SEC “is weaponizing their role to kill an industry.”
Hagerty specifically pointed to the lawsuit filed by the SEC against Coinbase despite the exchange being allowed to go public in 2021. “Allowing a company to list publicly and then stonewalling their attempts to register is indefensible,” he said, adding, “Gary Gensler, expect to hear from Congress.”
Hagerty previously joined a group of Senators in sending a letter to Federal Reserve Chairman Jay Powell, Chairman of the FDIC Marty Gruenberg, and Acting Comptroller of the Currency Michael Hsu that demanded answers for “federal financial regulators’ application of pressure on financial institutions to cut off services to licensed, legally operating cryptocurrency and digital asset companies.”
