Robinhood’s Chief Authorized Officer Daniel Gallagher criticized the US Securities and Change Fee’s (SEC) strategy to crypto regulation in written testimony submitted for a Sept. 18 listening to earlier than the Home Monetary Companies Subcommittee on Digital Belongings.
Gallagher detailed Robinhood’s efforts to adjust to SEC rules, citing over a dozen conferences and calls over 18 months. Nevertheless, regardless of these efforts, the corporate obtained a Wells discover from the SEC’s Enforcement Division in Could.
He identified that the SEC workers had been typically unresponsive to Robinhood’s requests for steering on transferring ahead with its registration proposal.
‘Scorched earth strategy’
Gallagher labeled the SEC’s technique a “scorched earth” strategy that negatively impacts US crypto traders.
He argued that the shortage of clear steering on which digital asset transactions qualify as funding contracts stays a elementary subject. This uncertainty has led to a number of lawsuits by the SEC towards crypto corporations, additional hampering business progress.
Gallagher added that “regulation by enforcement” harms American shoppers looking for larger entry to digital belongings. It additionally stifles innovation in blockchain and erodes the US’s aggressive edge in international digital asset markets.
He contrasted the US with Europe, the place the Markets in Crypto-Belongings (MiCA) regulation gives a unified framework for crypto markets, enabling innovation to flourish abroad.
Subsequent steps for SEC
Gallagher urged that the SEC might use its current authority underneath Part 36 of the Securities Change Act of 1934 to create a framework for registering and overseeing platforms that facilitate buying and selling in digital belongings deemed funding contracts.
He famous this rulemaking might handle key points reminiscent of registration, client protections, custody necessities, and transaction reporting. These measures, he added, might have mitigated a few of the injury brought on by the FTX collapse in 2022.
Congress roles
Gallagher emphasised the necessity for Congress to ascertain a clear, complete regulatory framework for digital belongings.
He argued that solely Congress can present the long-term regulatory readability wanted to make sure token issuers, exchanges, and different market members can function with out worry of fixed enforcement actions.
Such readability, in accordance with Gallagher, is essential for sustaining the US’s management in accountable blockchain innovation and well-regulated digital asset markets.
