Republican House members protest proposed SEC rules, claiming they would stifle digital asset industry, demand withdrawal

A group of lawmakers on the House Financial Services Committee sent a letter to the SEC this week criticizing its proposed rule, noting that it could expand the scope of exchanges to include "communications protocol systems," beyond the boundaries of centralized exchanges.

"For digital assets, the proposed rules would extend well beyond the regulation of centralized digital asset platforms and apply to individuals acting in 'concert' with one another," the lawmakers said. "This could attract a wide range of individuals to participate in the digital asset ecosystem, including software developers and participants in blockchain network consensus mechanisms."

Nearly 30 lawmakers signed the letter, including House Financial Services Chairman Patrick T. McHenry, French Hill, Tom Emmer and Warren Davidson.

SEC Gensler Personal Opinion

Lawmakers slammed SEC Chairman Gary Gensler for "using the proposed rule to advance his personal views on digital assets." They pointed out that Gensler had previously made statements claiming that decentralized financial exchanges (DeFi) are essentially the same as intermediaries in traditional financial markets, even if they call themselves different entities.

Lawmakers also accused the SEC of trying to get ahead of Congress as it worked with the House Agriculture Committee on a digital asset regulation bill.

Leaders of both the House Financial Services Committee and the House Agriculture Committee released draft bills to regulate cryptocurrencies, which include measures such as classifying cryptocurrencies as securities or commodities and regulating exchanges.

McHenry said during Tuesday's hearing that he hopes to have a vote on the bill by mid-July.

"This is a draft bill," he said at the hearing. "There is plenty of time for our members to discuss how to reach consensus on this issue. But please be advised that after the July 4 recess, I intend for this committee to have input on some form of legislation."