The oversight strategy utilized by SEC chair Gary Gensley prompts concerns from Congressman Tom Emmer over its suitability.
Enacting comprehensive regulations has been a priority globally to shield citizens and investors from bad actors. While many jurisdictions have continually updated their regulatory framework, cases of colossal downfalls of crypto ecosystems and exchanges, including FTX, Terra, Voyager, and Celsius Network, cast doubts on the strategy’s effectiveness.
The contagious nature of the FTX Group collapse and extensive meltdown across the crypto sector triggered a series of investigations. The observation from preliminary scrutiny reveals concerns over the oversight strategy utilized by regulators and enforcement agencies. In particular, Congressman Tom Emmer expressed criticism of the oversight approach adopted by SEC chair Gary Gensler toward restoring sanity within the crypto ecosystem.
Criticism towards Inconsistent SEC Approach
Emmer often calls out Gensler’s approach as inconsistent, indiscriminate, and unsuitable for evolving crypto ecosystems. The initial criticism was evident on March 16 when Emmer was approached by blockchain and crypto firms regretting Gensler’s reporting requirements they considered overburdensome and strangling innovation.
Emmer pleaded with SEC to align their reporting requirements to the standards stipulated within the Paperwork Reduction Act (1980). He poked holes in the current approach as contravening the provisions directing the federal government to reduce the paperwork burden imposed on private businesses and citizens.
Emmer categorically attacked the SEC pressers by indicating that Congress cannot only rely upon hypothetical accounts of SEC oversight agenda replicated in progressive publications. Instead, Emmer directs Gensler to commit through public testimonies during inquiries conducted by the Financial Services Committee.
Necessity of Careful Regulation
Weighing the dramatic episodes of FTX Group collapse, US Treasury Secretary Janet Yellen reinforced Emmer’s perspective of SEC to initiate cautious oversight and regulation. Yellen admitted the current oversight by regulatory agencies is vulnerable to an inherent weakness in the entire crypto sector. Wondering how Alameda Research could utilize customers’ deposits in lending to affiliate enterprises, Yellen criticized the suitability of the current strategy.
The revelation of oversight ineffectiveness in protecting customers against FTX Group scares the regulatory agencies into action. For instance, the irresponsible leveraging within FTX Group and the uncontrolled cross-ownership of assets among affiliates illustrates the ineffectiveness of the SEC approach. In a similar sentiment, Senator Elizabeth Warren challenged SEC for its failure to create regulatory clarity and not merely an aggressive crackdown on a few US crypto firms.
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