Cynthia Lummis Warns U.S. Risks Falling Behind on Global Crypto Market Due to SEC’s Tactics

• Senator Lummis criticized the SEC’s enforcement-heavy approach, arguing it creates uncertainty in the U.S. crypto sector.
• Lummis believes Bitcoin and Ethereum should be regulated by the CFTC, not the SEC, as decentralized commodities.
• Lummis called for Congress to create clear legislation, warning the U.S. risks losing its competitive edge in the global crypto market.

Senator Cynthia Lummis has criticized the U.S. Securities and Exchange Commission for its approach to cryptocurrency regulation. During an interview on CNBC, Lummis called out SEC Chair Gary Gensler, labeling his strategy toward the crypto market as both problematic and counterproductive.

Cynthia Lummis on SEC’s Tactics

During the interview, Lummis highlighted the numerous issues plaguing the US crypto industry, worsened by the SEC’s current tactics. She criticized Gensler for relying on enforcement actions rather than providing clear guidelines. 

This approach has led to significant uncertainty, with many digital asset companies entangled in legal disputes instead of following clear rules.

Regulatory Hurdles

Lummis argued that the SEC has slowed the growth of the cryptocurrency industry. She stressed the need for clear regulations. Moreover, she noted that the current legal framework is outdated and ineffective. It cannot keep up with technological advancements in crypto space. 

Additionally, she highlighted the European Union’s progress in adopting crypto laws in 2023. Lummis believes the U.S. is falling behind. Consequently, she warned that the U.S. may lose its place in the global financial market. Addressing these regulatory gaps, she said, is crucial for the country’s competitiveness.

Jurisdictional Clarity Needed

The Senator also discussed the classification of digital assets, expressing her view that Bitcoin and Ethereum should be considered commodities and fall under the jurisdiction of the CFTC, not the SEC. 

Lummis emphasized the need for Congress to enact legislation that defines the roles of different agencies concerning digital assets. She noted that while some assets could be regulated by the CFTC, a comprehensive and current framework is essential for market regulation. 

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She also suggested that the Howey Test, used to determine whether an asset is a security, may need updating to reflect current developments in the crypto market.

Gensler’s Stance

In contrast, SEC Chair Gary Gensler has maintained that the US already has adequate crypto regulations. Responding to industry criticism, Gensler argued that disliking the rules does not equate to their absence. 

He emphasized the SEC’s focus on investor protection, noting that many crypto firms have capitalized on public interest in digital assets without providing proper disclosures.

Gensler reiterated that Bitcoin is not a security, a stance shared by his predecessor Jay Clayton. This distinction allowed the SEC to approve Bitcoin Spot Exchange-Traded Funds (ETFs) earlier this year. However, Gensler has remained largely silent on Ethereum’s classification.