The U.S. House Financial Services and Agriculture Committees have met to consider changes to existing legislation to address crypto disclosures and dispel regulatory uncertainty.
The committees, chaired by Senator Patrick McHenry and Representative Glenn Thompson, heard testimonies from Kraken, Web3, TradFi, and regulatory personnel.
Regulators Spar Around SEC Disclosure Regime
Rather than advancing new U.S. crypto legislation, the hearing entitled The Future of Digital Assets: Measuring the Regulatory Gaps in the Digital Asset Markets mulled supplementing existing laws with crypto amendments.
It follows an April 27 Agriculture subcommittee hearing views on regulating crypto spot markets.
McHenry confirmed in his opening statement,
“The purpose here is to make law for us to give assurance to the marketplace and to consumers to close regulatory gaps…to harness innovation and enable consumer protection [and to] ensure that the [Commodity Futures Trading Commission] and the Securities Exchange Commission (SEC) will work together to ensure that consumers are protected unlike what is currently happening.”
In his opening statement, Agriculture Committee member Representative Dusty Johnson affirmed the potential of blockchain technology.
“We know that digital assets and the blockchain technology holds real promise…I think all of us know the current uncertainty does not serve us well. It doesn’t serve the marketplace.”
Johnson previously filed a Resolution to support blockchain and digital assets. The Resolution establishes the House’s view that the SEC’s process to identify securities needs revision.
The Resolution further argues that the SEC’s current disclosure scheme cannot capture digital asset features an investor needs to make informed decisions. Kraken’s chief legal officer Marco Santori captured a similar sentiment in his opening remarks.
However, Representative Stephen Lynch countered that crypto advocates criticize SEC disclosure regimes because they know their businesses do not comply with “orderly markets and investor protection law.”
“Rather than comply with existing rules, various cryptocurrency firms have engaged in a legal battle against the SEC.”
He pointed out that the SEC had “prevailed” in its 130 cases against the crypto industry.
Earlier this year, the agency sued Kraken for offering its Ethereum staking products as unregistered securities. The firm settled with the SEC without admitting nor denying guilt.
A court recently ordered the SEC to respond to Coinbase‘s request for regulatory clarity. The SEC had previously issued Coinbase a Wells Notice threatening enforcement against unregistered securities listings.
Don’t Expect US Crypto Legislation Soon, Says Commissioner
Speaking at the Financial Times Crypto and Digital Assets Summit in London, SEC Commissioner Hester Peirce is not optimistic about U.S. crypto legislation any time soon.
However, she pointed out the U.S. could mine Europe’s Markets-in-Crypto-Assets regulation for regulatory clues. The European Union recently passed the MiCA bill. The legislation defines asset disclosure requirements and money laundering rules for crypto exchanges, among other things.
Harvard researcher Timothy Massad advocated a Self-Regulatory Organization involving the SEC and the CFTC at the hearing. The United States Congress would sanction the SRO.
In Europe, firms with licenses in one EU member state can operate in the remaining 26. Local regulators handle license applications, while the European Banking Authority and the European Securities Authority enforce compliance with MiCA rules.
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