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Senator Lummis Takes a Stand Against SEC’s Crypto Crackdown, Says the Commission is “Overreaching”

Senator Cynthia Lummis (R-Wyo.) has raised her objections to the Securities and Exchange Commission’s (SEC) ongoing regulatory actions targeting the cryptocurrency industry. In an interview with Yahoo Finance, she expressed her concerns about the regulatory agency’s actions and made a commitment to thwart one of its contentious new crypto policies.

Lummis stated, “I think the SEC is overreaching.” The SEC has been pursuing aggressive measures, including legal action against major players in the crypto space, such as Coinbase and Binance.

Of particular concern to Lummis is a policy issued by the SEC in March 2022, known as “Staff Accounting Bulletin 121.” This policy and the broader regulatory approach have raised questions and objections within the crypto industry and among policymakers regarding their impact on innovation and market development.

The “Staff Accounting Bulletin 121” policy issued by the SEC mandates that financial firms holding customers’ cryptocurrency assets must include them on their balance sheets. Additionally, it requires these firms to provide investors with warnings regarding the associated risks of safeguarding these assets.

However, the Government Accountability Office (GAO) has recently stated that the SEC should have sought congressional approval for this policy guidance.

Senator Lummis is now determined to block this policy from becoming binding, citing it as an instance of the SEC’s overreach. She is working to garner support for her efforts in both the Senate and the House in the coming weeks.

Lummis contends that the bulletin, if enforced, could potentially harm consumers, particularly if a digital asset custodian were to face financial difficulties or collapse. Her concerns revolve around the potential impact on investors and the overall cryptocurrency market, underscoring the ongoing debate over the appropriate level of regulation for the crypto industry.

Lummis Works On a Number of Crypto Legislations

Senator Cynthia Lummis is actively engaged in multiple efforts to provide the cryptocurrency industry with more regulatory clarity in Washington.

She has partnered with Senator Kirsten Gillibrand (D-N.Y.) to co-sponsor comprehensive cryptocurrency legislation that seeks to define the regulatory framework for the sector. Lummis expressed optimism about resolving differences between the House and Senate versions of the legislation, particularly concerning stablecoins.

She stated, “Sen. Gillibrand and I see the small differences between the House and the Senate versions, specifically related to stablecoins, and we know they’re resolvable.” With a new House speaker and a renewed legislative agenda, she believes that they will be able to reach a resolution on stablecoins.

Lummis is hopeful that this cryptocurrency legislation will be passed early in 2024 and is open to including specific provisions in other legislative packages. This legislative effort reflects ongoing attempts to establish a regulatory framework for the cryptocurrency industry and provide greater clarity for market participants and investors.

In recent weeks, a portion of Senator Lummis’ bill addressing the issue of terrorist financing has been incorporated into the Senate’s defense spending package, known as the National Defense Authorization Act. This legislation is currently undergoing discussions and reconciliation with the House.

Senator Lummis emphasizes the importance of such measures, citing concerns that organizations like Hamas are increasingly using cryptocurrencies to support their activities.

She also voiced her support for the House Financial Services Committee’s cryptocurrency framework, led by Committee Chair Patrick McHenry (R-N.C.). Senator Lummis is open to progress from either legislative body, underlining the urgency of establishing a clear regulatory framework for the cryptocurrency industry.

Democrats Criticize SEC Over Handling of Crypto Accounting Bulletin

In the previous week, Democratic Representative Wiley Nickel from North Carolina expressed criticism of the Securities and Exchange Commission’s (SEC) handling of a contentious bulletin related to the accounting of cryptocurrency holdings by companies. He raised concerns about the potential adverse effects of the bulletin, suggesting that it might compromise the security of digital assets.

Other members of Congress have also expressed apprehension regarding the bulletin. Representative Patrick McHenry, a Republican from North Carolina and the Chair of the House Financial Services Committee, has stated his belief that the bulletin imposes significant new obligations on financial institutions and could potentially deter them from providing custodial services for digital assets. These concerns reflect the ongoing debate and scrutiny surrounding regulatory measures related to the cryptocurrency industry.

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Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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