A bipartisan group of eight U.S. lawmakers has sent a formal letter to Securities and Exchange Commission Chair Gary Gensler, raising concerns about how the agency is obtaining information from cryptocurrency and blockchain companies. The lawmakers say they have heard repeated complaints from industry participants that the SEC’s information requests are excessively burdensome, not truly voluntary in practice, and could be undermining innovation in the digital asset sector.
Bipartisan scrutiny of SEC information-gathering practices
The letter was signed by Representatives Tom Emmer, Darren Soto, Warren Davidson, Jake Auchincloss, Byron Donalds, Josh Gottheimer, Ted Budd, and Ritchie Torres. Their message focuses not on a specific enforcement action, but on the broader process the SEC is using to collect information from companies operating in crypto and blockchain markets.
According to the lawmakers, there appears to be a growing pattern in which the SEC’s Division of Enforcement is using investigative tools to gather information from participants in the largely unregulated cryptocurrency and blockchain industry. In their view, this trend may not align with the commission’s own standards for opening investigations. That concern is significant because for many companies, especially startups, an information demand from a regulator can carry substantial legal, operational, and financial consequences even when it is framed as a request rather than a formal charge.
Rep. Tom Emmer said his office had received numerous tips from crypto and blockchain firms claiming that reporting requests under Chair Gensler have become so demanding that they feel coercive rather than optional. The companies, according to that characterization, see the process as one that consumes time and resources and creates uncertainty for businesses already operating in a fast-changing regulatory environment.
Concern that innovation may be chilled
The lawmakers argue that the SEC’s approach could be doing more than simply increasing compliance pressure. They suggest it may be stifling innovation in a sector where small firms and early-stage builders often lack the legal budgets and staffing necessary to respond to broad or repeated government inquiries. In this context, even informal requests can become a heavy burden.
Rep. Warren Davidson echoed that point publicly, saying the United States should be promoting domestic innovation rather than suppressing it through what he described as an incoherent mix of bad regulation, selective enforcement, and ongoing inaction. His statement reflects a broader criticism heard across parts of the crypto industry and among some policymakers: that federal agencies have not always provided clear rules of the road, while still pursuing aggressive oversight through enforcement channels.
The issue is especially important for crypto startups. Unlike large financial institutions, early-stage blockchain companies may be highly sensitive to delays, legal uncertainty, and compliance costs. If responding to regulatory outreach requires major document production, extensive legal review, and repeated follow-up, that can divert resources from product development, hiring, and expansion. The lawmakers’ letter frames this as a policy problem with direct implications for American competitiveness.
Possible conflict with the Paperwork Reduction Act
A central element of the lawmakers’ argument is that the SEC’s conduct may be inconsistent with the Paperwork Reduction Act (PRA). They said they have reason to believe the agency’s requests might conflict with that law, which is designed to ensure that federal agencies act as responsible stewards of the public’s time when seeking information.
Under the PRA, agencies are generally expected to avoid overwhelming the public with unnecessary, duplicative, or excessively burdensome information demands. The lawmakers’ concern, as presented in the letter, is that crypto firms may be facing exactly that kind of pressure. If requests are overly broad or repetitive, critics could argue that the government is imposing significant compliance costs without a sufficiently transparent or consistent process.
This legal angle gives the letter more weight than a purely political complaint. Rather than simply objecting to the SEC’s policy direction, the lawmakers are questioning whether the agency’s information-collection methods may conflict with established standards governing federal paperwork demands. That shifts the debate from one of regulatory philosophy to one of administrative accountability.
What the lawmakers want from the SEC
The group asked Chair Gensler to answer 13 questions about the SEC’s practices, with a response requested by April 29. While the article does not reproduce the entire list, the demand for written answers signals that lawmakers want a clearer explanation of how the agency decides when and how to seek information from digital asset companies, and whether those procedures are being applied appropriately.
Rep. Emmer also stressed that crypto startups should not be weighed down by reporting requirements that are both burdensome and potentially extra-jurisdictional. In his view, regulators should not be allowed to choke off innovation and opportunity in the United States through methods that exceed their proper authority or create unjustified pressure on emerging businesses.
The request for answers may also be seen as part of a larger congressional effort to push for more transparent digital asset regulation. For years, crypto policy in the United States has been marked by overlapping jurisdictions, uncertainty over token classification, and frequent disputes about whether enforcement has outpaced rulemaking. Against that backdrop, questions about process matter almost as much as questions about substance.
A broader fight over crypto regulation in the U.S.
This episode highlights a recurring tension in Washington. On one side, the SEC has sought to assert a stronger role in policing crypto markets, often arguing that investor protection and market integrity require close scrutiny of digital asset activity. On the other side, industry participants and some lawmakers contend that the agency’s posture can become counterproductive when it relies on unclear standards and heavy procedural pressure rather than straightforward rulemaking.
The lawmakers’ letter does not settle that debate, but it does underscore growing political resistance to regulatory tactics perceived as opaque or overly aggressive. It also shows that criticism of the SEC’s crypto approach is not limited to one party. The bipartisan nature of the letter suggests that concerns about innovation, due process, and administrative burden are resonating across ideological lines.
For the crypto sector, the outcome of this exchange could matter beyond the immediate questions posed to the SEC. If Congress continues pressing agencies to justify how they gather information and initiate enforcement activity, firms may gain stronger grounds to challenge expansive demands. Conversely, if the SEC defends its approach successfully, the agency may feel emboldened to continue using investigative tools to expand its oversight of the industry.
At minimum, the letter puts a spotlight on a core policy dilemma in U.S. crypto regulation: how to balance the government’s need for information and enforcement authority with the need to preserve room for entrepreneurship and technological development. As lawmakers await the SEC’s response, that tension is likely to remain central to the broader debate over America’s digital asset future.