Senator Cynthia Lummis of Wyoming, a vocal advocate for digital assets, has raised concerns about the approach of the US Securities and Exchange Commission (SEC) towards cryptocurrency regulations. Speaking on CNBC’s Squawk Box, Lummis questioned SEC Chair Gary Gensler’s handling of the cryptocurrency market, labeling it as counterproductive and problematic.
During the interview, Lummis emphasized the challenges faced by the US crypto industry, exacerbated by the SEC’s current methods. She criticized Gensler for relying on enforcement actions rather than offering clear regulatory guidelines, leading to ambiguity and legal disputes for many digital asset companies.
Lummis highlighted that the SEC’s approach has impeded the growth of the cryptocurrency sector, stressing the importance of regulatory clarity. She pointed out the inadequacy of the existing legal framework, particularly compared to the European Union’s comprehensive crypto laws established in 2023. Lummis warned that without swift improvements in regulation, the United States risks losing its competitive edge in the global financial services market.
In advocating for a change in oversight, Lummis suggested that Bitcoin and Ethereum should be categorized as commodities under the Commodity Futures Trading Commission (CFTC) rather than the SEC. She argued that the classification of digital assets as securities by the SEC does not align with the decentralized nature of cryptocurrencies like Bitcoin and Ethereum.
Furthermore, Lummis urged Congress to clarify the roles of different agencies in regulating digital assets and update existing frameworks to keep pace with market developments. She highlighted the need for a modernized approach, including revisiting the Howey Test to reflect the evolving landscape of the crypto market.
In contrast, SEC Chair Gary Gensler maintained that current regulations exist for cryptocurrencies within the US. Gensler emphasized the SEC’s focus on investor protection, noting the necessity of proper disclosures for crypto firms benefiting from public interest in digital assets.
Regarding the treatment of Bitcoin and Ethereum, Gensler affirmed Bitcoin’s status as a non-security, enabling the approval of Bitcoin Spot Exchange-Traded Funds (ETFs). However, he remained relatively silent on Ethereum’s classification, with regulatory decisions hinting at its consideration as a commodity.
To address regulatory gaps, Lummis called for legislative changes, including her proposal alongside Senator Kirsten Gillibrand to revise the wash sale rule for increased CFTC funding and enhanced regulatory capacity in the digital asset space. Additionally, Lummis, alongside other lawmakers, expressed reservations about the SEC’s Staff Accounting Bulletin 121 (SAB 121), urging Gensler to withdraw the directive due to its restrictive implications on the crypto industry.