SEC’s crypto regulations are ‘authoritarian whims,’ lawmakers say

Lawmakers demanded Gensler to clarify airdrop regulations by the 30th of September.
SEC’s regulatory approach raised concerns about stifling blockchain innovation and American involvement.

As a seasoned financial analyst with over two decades of experience navigating the tumultuous waters of Wall Street, I have seen regulators come and go, but few have stirred as much controversy as Gary Gensler. His tenure at the SEC has been marked by a relentless pursuit of clarity in an industry that seems to thrive on ambiguity – cryptocurrencies.

2024 saw increased examination of the cryptocurrency industry by the U.S. Securities and Exchange Commission (SEC), leading to Wells notifications being sent to key players such as Uniswap [UNI], ConsenSys, and Robinhood. The SEC is also considering taking action against NFT platform OpenSea in the form of enforcement measures.

In light of the recent regulatory tightening, two Republican representatives are urging Securities and Exchange Commission Chairman Gary Gensler to provide more information about how cryptocurrency airdrops should be categorized.

Gensler on check?

On September 17th, Representative Tom Emmer and House Financial Services Committee Chair Patrick McHenry penned a letter expressing their worries, asking Gensler to clarify uncertainties about airdrops that have arisen in recent court cases.

We’re exploring ways to gain clarity on how the Securities and Exchange Commission (SEC) perceives and handles the distribution of digital assets through a process known as ‘airdrop’.

The letter expressed concerns over the SEC’s handling of digital asset distributions, specifically airdrops, which are crucial for encouraging participation and fostering the decentralization of blockchain networks.

Lawmakers are concerned that this unfavorable regulatory climate might hinder the achievement of blockchain’s objectives for decentralization, potentially limiting American participation in shaping the future of internet innovations.

“Scared to death of decentralization”

Expressing further on the matter, Emmer took to X (formerly Twitter) and noted,

People are terrified of decentralization as it returns power back to the roots, mirroring the democratic foundation upon which this nation was established.

He further added,

Let’s not entrust the fate of the decentralized digital economy to the authoritative decisions of Gary Gensler.

In their correspondence, Emmer and McHenry have requested that SEC Chairman Gensler tackle five fundamental concerns on crypto airdrops by the 30th of September. Among these are the legal classification of airdrops under the Howey test and the differentiation between them and incentives such as credit card points.

It’s suggested that the SEC’s regulations are hindering Americans from fully reaping the benefits of blockchain technology, potentially weakening their influence on its development, and not aligning with American values and objectives.

What lies ahead for Gensler?

Based on Chair Gensler’s stance on cryptocurrency, he has openly voiced his exasperation about the overwhelming influx of queries related to cryptocurrencies compared to those from traditional finance, noting that they are considerably more frequent.

Although cryptocurrencies represent a relatively minor portion of the total market, they account for a disproportionately large share of scams, fraudulent activities, and issues within the financial sector.

It’s yet uncertain how Gensler will handle these issues and if he will remain at the helm of the SEC until 2025.

2024-09-18 20:08

Gensler on check?

“Scared to death of decentralization”

What lies ahead for Gensler?

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