US losing edge in crypto due to SEC’s ‘scorched earth’ tactics, Robinhood exec says

Robinhood Chief Authorized Officer Daniel Gallagher criticized the U.S. Securities and Alternate Fee’s (SEC) strategy to crypto regulation in written testimony submitted for a September 18 listening to earlier than the Home Monetary Companies Subcommittee on Digital Belongings.

Gallagher described Robinhood’s efforts to adjust to SEC laws, citing greater than a dozen conferences and telephone calls over 18 months. Nonetheless, regardless of these efforts, the corporate obtained a discover from Wells of the SEC’s Enforcement Division in Could.

He identified that SEC workers usually didn’t reply to Robinhood’s requests for steerage on methods to proceed with the registration proposal.

‘Scorched earth strategy’

Gallagher labeled the SEC’s technique as a “scorched earth” strategy that negatively impacts U.S. crypto buyers.

He argued that the dearth of clear steerage on which digital asset transactions qualify as funding contracts stays a elementary drawback. This uncertainty has led to a number of SEC lawsuits in opposition to crypto corporations, additional hindering the business’s progress.

Gallagher added that “regulation by enforcement” is hurting American customers searching for higher entry to digital belongings. It additionally stifles blockchain innovation and erodes the US aggressive benefit in world digital asset markets.

He contrasted the US with Europe, the place the Markets in Crypto-Belongings (MiCA) laws present a unified framework for crypto markets, permitting innovation to flourish overseas.

Subsequent steps for SEC

Gallagher steered that the SEC might use its current authority underneath Part 36 of the Securities Alternate Act of 1934 to create a framework for registering and overseeing platforms that commerce in digital belongings thought of funding contracts , facilitate.

He famous that these laws might handle essential points resembling registration, shopper safety, retentions and transaction reporting. These measures, he added, might have mitigated a number of the injury brought on by the 2022 FTX collapse.

Congressional roles

Gallagher emphasised the necessity for Congress to determine a transparent, complete regulatory framework for digital belongings.

He argued that solely Congress can present the long-term regulatory readability wanted to make sure that token issuers, exchanges and different market members can function with out worry of continued enforcement motion.

Such readability, in keeping with Gallagher, is essential to sustaining US management in accountable blockchain innovation and well-regulated digital asset markets.

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