Eight U.S. lawmakers from both parties have sent a bipartisan letter to Securities and Exchange Commission (SEC) Chairman Gary Gensler, sharply criticizing how the agency collects information from cryptocurrency and blockchain companies. The lawmakers argue that the SEC's so-called 'requests' are overly burdensome, far from voluntary, and are actively stifling innovation in the digital asset space.
Lawmakers Speak Out: SEC's 'Requests' Are Not Voluntary
The letter, signed by Representatives Tom Emmer, Darren Soto, Warren Davidson, Jake Auchincloss, Byron Donalds, Josh Gottheimer, Ted Budd, and Ritchie Torres, points out that the SEC's recent trend of using the Enforcement Division's investigative functions to gather information from unregulated crypto participants is inconsistent with the Commission's own standards for launching investigations. 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. Warren Davidson echoed the sentiment: 'We must promote American innovation rather than stifle it with an incoherent mix of bad regulation, selective enforcement, and ongoing inaction.' He added that joining the letter was a step to prevent the SEC from 'crippling crypto in America.'
Potential Violation of the Paperwork Reduction Act
The lawmakers specifically cite the Paperwork Reduction Act (PRA), which requires federal agencies to be good stewards of the public's time and avoid unnecessary or duplicative requests for information. They have 'reason to believe that these requests might be at odds with the PRA.' The letter stresses that crypto startups must not be weighed down by extra-jurisdictional and burdensome reporting requirements.
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.'
SEC Must Answer 13 Questions
The letter demands that the SEC answer 13 specific questions no later than April 29. These questions cover the legal basis for information collection, scope of data usage, compliance with PRA procedures, and more. The full list has been made public. This marks another direct confrontation between Congress and the regulator over crypto oversight.
The SEC’s approach to crypto regulation has been a flashpoint. Chairman Gensler has repeatedly stated that most crypto tokens are securities requiring exchange registration, while the industry decries a lack of clear rules and over-reliance on enforcement. This bipartisan pressure could reshape future SEC policy toward digital assets.