Experts and US lawmakers debate the role of the SEC in crypto regulation

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Senator Tim Scott asked whether the SEC was “asleep behind the wheel” in light of major bankruptcies in crypto space, resulting in the loss millions in user funds. News Collect this piece of history as an NFT Scott stated that the SEC had failed to provide “the slightest bit” of guidance, potentially leading to a lack of investor protection at bankrupt companies like FTX, Terra BlockFi, Voyager and Celsius. “If they have all the tools they need, are they just asleep at their desk?” […] We would be happy to have Chairman Gensler testify at the Senate Banking Committee hearing on February 14Witnesses at the hearing suggested different approaches for lawmakers looking to regulate cryptocurrency. Lee Reiners, chief global regulatory officer at the Crypto Council for Innovation, testified that Congress should pursue legislation to “carve cryptocurrency” from the Commodity Futures Trading Commission and make it a security within the exclusive purview of the SEC. Crypto Council for Innovation chief global regulatory officer and general counsel Linda Jeng testified that the lack of a consistent federal regulatory framework on crypto contributed to a lack of investor protection and uncertainty among firms:”The SEC has not initiated any formal rulemaking process to update securities laws that are decades old to account for the unique attributes of digital assets that are determined to be securities.”Vanderbilt University law professor Yesha Yadav echoed some of Jeng’s concerns on developing a federal framework for crypto, but also proposed a self-regulatory regime in which exchanges could oversee themselves as a complement to public regulation. Failure to follow the rules could result in financial penalties for firms that fail to comply. Report: The SEC is attempting to create a federal framework for crypto. However, Yesha Yadav, a Vanderbilt University law professor, expressed some concerns about Jeng’s approach to developing regulating crypto. She also suggested a self-regulatory regime where exchanges could oversee themselves as an alternative to public regulation. Gensler claimed that most token projects are securities under the SEC guidelines, and repeatedly urged firms to “come in to talk to us”. In 2023, the agency already took enforcement actions against Kraken & Paxos.