U.S. Crypto Regulations: Senator Cynthia Lummi Demands Clarity Amid SEC’s Unclear Approach

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With the US presidential elections around the corner! Senator Cynthia Lummis of Wyoming calls out the U.S. Securities and Exchange Commission (SEC) for its approach to regulating cryptocurrencies. In a recent interview on CNBC’s Squawk Box, she criticized SEC Chair Gary Gensler for using enforcement actions instead of providing clear rules for the industry. Lummis argued that this method creates uncertainty, leaving many digital asset companies stuck in legal battles instead of focusing on growth.

Lummis emphasized that the U.S. crypto industry faces many challenges because of the SEC’s unclear tactics. She pointed out that without clear regulations, the country risks falling behind in the global financial market. In contrast, the European Union has already rolled out comprehensive crypto laws, which could put the U.S. at a disadvantage.

CFTC Oversight for Bitcoin and Ethereum

A key part of Lummis’s argument is her belief that Bitcoin and Ethereum should be treated as commodities rather than securities. She suggests that the Commodity Futures Trading Commission (CFTC) should oversee these cryptocurrencies instead of the SEC. According to Lummis, the SEC’s current strategy of labeling decentralized assets like Bitcoin and Ethereum as securities does not fit their nature. She believes Congress needs to create clear laws to define the roles of different agencies in regulating digital assets.

Proposed Legislative Changes

To address these regulatory gaps, Lummis, along with Senator Kirsten Gillibrand, has proposed changes to the wash sale rules. These changes would enhance the CFTC’s ability to regulate digital assets more effectively. Lummis argues that such updates would help create a balanced regulatory environment that encourages innovation while protecting consumers.

Additionally, Lummis has raised concerns about the SEC’s Staff Accounting Bulletin 121 (SAB 121). This regulation requires crypto custodians to treat customer assets as liabilities, which she believes places unnecessary burdens on the industry. Lummis and other lawmakers have called for the withdrawal of SAB 121 to alleviate these pressures.

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Gensler’s Response

In response to the criticism, SEC Chair Gary Gensler maintains that the U.S. already has sufficient crypto regulations. He argues that just because some in the industry dislike the rules doesn’t mean they don’t exist. Gensler has affirmed that Bitcoin is not a security, but he has remained silent on the classification of Ethereum.

Overall, Lummis’s critique highlights the need for clearer and more supportive regulations for the crypto industry in the U.S., aiming to foster growth and protect investors.