Emmer: Limit SEC, Fire Gensler

At the end of last week, United States Representative Tom Emmer sponsored an appropriations amendment designed to limit the amount of funds the SEC can spend on digital asset enforcement.

Emmer, who is Majority Whip of the House of Representatives, has proven a crypto-friendly politician who has frequently stood up for the rights of retail investors.

Regulation By Enforcement

The SEC has carried numerous "enforcement actions" in recent years, and the pace of its activities has accelerated in 2023, despite several high-profile defeats in court (including by Grayscale and Ripple). However, clear regulation does not yet exist, meaning that the SEC is effectively creating legislation by dropping lawsuits on the crypto/DeFi projects it targets. This "regulation by enforcement" approach has drawn the anger of the crypto community, and increasing awareness from Congress.

Earlier this month Emmer introduced the Blockchain Regulatory Certainty Act, which makes it clear that blockchain developers and service providers who do not actually custody funds (i.e. rely on the user managing their own private keys) are not considered to be money transmitters under the law.

Emmer has also added his voice to Representative Warren Davidson’s "SEC Stabilization Act", which aims to remove Gary Gensler as head of the SEC.

The SEC has no authority to make laws, but claim the necessary guidelines exist to carry out enforcement. This has been repeatedly challenged, including by Emmer and other politicians, as well as in various court cases. Gensler has previously been questioned by the House Financial Services Committee, and despite repeatedly being pressed, was unable to state whether ETH was a security or a commodity.

Senate Banking Committee

Yesterday, on September 12, Gensler testified before the Senate Banking Committee. In the hearing, he reiterated his stance that he believes the SEC is the organization best placed to regulate crypto.

"Congress could have said in 1933 or in 1934 that the securities laws applied only to stocks and bonds. Yet Congress included a long list of 30-plus items in the definition of a security, including the term 'investment contract.' As I’ve previously said, without prejudging any one token, the vast majority of crypto tokens likely meet the investment contract test. Given that most crypto tokens are subject to the securities laws, it follows that most crypto intermediaries have to comply with securities laws as well."

Gensler emphasized his view that the crypto industry is rife with abuse. When specifically questioned about what he would need to see to approve a spot Bitcoin ETF, following the SEC's defeat in court by Grayscale, he dodged the question, simply saying that the agency as reviewing multiple submissions and awaiting "staff's recommendations".

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