The consumer advocacy group, Digital Currency Trader’s Alliance (DCTA), has called on retail crypto investors to lobby their congressional representatives to fight the Security and Exchange Commission’s crackdown on crypto.
The purpose of the initiative, called “Stop the SEC,” is to ask Congress to clarify regulations to prevent SEC overreach from harming retail crypto customers.
DCTA Wants Retail Investors to Communicate Effects of SEC Crackdown
Speaking to Fox Business, the group’s Deputy Director Kevin Trommer said, “We created this campaign to connect everyday consumers with their congressional representatives so they can tell them firsthand how the SEC’s regulation by enforcement approach to crypto is hurting their investments.”
The nonprofit has drafted a Crypto Consumer Legislative Handbook that retail investors can use to lobby lawmakers in their districts to support pro-crypto legislation.
Coinbase recently announced an advocacy campaign called Crypto435 to lobby for pro-crypto laws in 435 U.S. Congressional Districts. The exchange also boosted its advocacy last year by integrating crypto scores for politicians into its smartphone application.
DCTA Joins Effort to Limit SEC Overreach While Congress Approves Laws
The call to arms by Coinbase and the DCTA comes after senators in multiple U.S. states reacted to the impact of the collapse of several crypto firms on retail investors by drafting a patchwork of bills for different niches in the crypto industry.
While these bills await the sometimes lengthy legislative process on Capitol Hill, the SEC has stepped in with several enforcement actions designed to set legal precedents for similar future actions.
SEC Chair Gary Gensler claims that 1933 laws are sufficient to regulate crypto. Still, crypto advocates argue that sparse guidance on applying the laws to crypto allows the SEC freedom when interpreting rules.
SEC Commissioner Hester Peirce recently called the agency’s actions against crypto exchange Kraken those of a “paternalistic and lazy regulator.” She advocated for dialogue between the company and the SEC to understand Kraken’s product before the enforcement action.
Rep. Ritchie Torres of New York ranked as Positive on Coinbase’s app, wrote to the U.S. Government Accountability Office in December last year to review the SEC’s role in the collapse of FTX.
He called for greater accountability for Gensler, who, despite claiming to be the industry’s watchdog, failed to create meaningful regulations that could have uncovered the alleged fraud at the Bahamian exchange.
Representative Tom Emmer of Minnesota says that the crypto industry needs greater transparency and decentralization post-FTX. He argues that stifling regulation that fails to recognize Sam Bankman-Fried as an old-school fraudster who thrived because U.S. legislation pushed FTX offshore is not the answer.
He said that existing laws and government agencies must deal with Bankman-Fried and prevent scams rather than new crypto laws.
State-Level Rules May Not be Enough for Federal Approval
However, lobbying for pro-crypto state laws may not yield the results crypto advocates hope for.
Recently, Caitlin Long, a crypto legislation pioneer in Wyoming, had Custodia Bank‘s application to become a member of the U.S. Federal Reserve turned down. The central bank viewed Custodia’s state legitimacy as a Special Purpose Depository Institution incapable of meeting federal banking requirements.
Crypto lobbying has also been cast in an unfavorable light after the collapse of FTX. Its co-founder Sam Bankman-Fried allegedly violated campaign finance laws while attempting to legitimize the industry at a federal level.
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