Eight U.S. representatives from both parties have jointly sent a letter to Securities and Exchange Commission (SEC) Chairman Gary Gensler, raising concerns about how the agency collects information from cryptocurrency and blockchain companies. The lawmakers argue that the SEC's recent information reporting 'requests' are "overburdensome, don't feel particularly voluntary, and are stifling innovation."
Bipartisan Pressure Mounts
The letter was signed by Republican Representatives Tom Emmer, Warren Davidson, Byron Donalds, and Ted Budd, along with Democratic Representatives Darren Soto, Jake Auchincloss, Josh Gottheimer, and Ritchie Torres. Made public on March 17, 2022, the letter demands that the SEC respond to 13 specific questions by April 29.
Congressman Emmer explained on Twitter: "My office has received numerous tips from crypto and blockchain firms that SEC Chair Gary Gensler’s information reporting 'requests' to the crypto community are overburdensome, don’t feel particularly …voluntary … and are stifling innovation." Rep. Davidson tweeted: "We must promote American innovation rather than stifle it with an incoherent mix of bad regulation, selective enforcement, and ongoing inaction. I joined Rep. Tom Emmer and colleagues sending a letter to SEC Chair Gary Gensler regarding the SEC crippling crypto in America."
Paperwork Reduction Act Violations Alleged
In the letter, the lawmakers pointed out: "It appears there has been a recent trend towards employing the Enforcement Division’s investigative functions to gather information from unregulated cryptocurrency and blockchain industry participants in a manner inconsistent with the Commission’s standards for initiating investigations." They stressed: "We have reason to believe that these requests might be at odds with the Paperwork Reduction Act (PRA)." According to the act, federal agencies must be good stewards of the public's time and not overwhelm them with unnecessary or duplicative requests for information.
Congressman Emmer emphasized: "Crypto startups must not be weighed down by extra-jurisdictional and burdensome reporting requirements. We will ensure our regulators do not kill American innovation and opportunities."
The letter's 13 questions delve into how the SEC defines 'voluntary' information requests, whether proper PRA clearance procedures were followed, and whether the agency treats crypto companies of different sizes differently. As of press time, the SEC has not publicly responded to the letter.
This action reflects growing legislative concern over the SEC's aggressive enforcement posture in the crypto space. While the SEC has argued its actions are necessary to protect investors, critics contend the agency's approach is stifling innovation and driving crypto firms overseas.