Robinhood’s Chief Authorized Officer Daniel Gallagher criticized the US Securities and Alternate Fee’s (SEC) strategy to crypto regulation in written testimony submitted for a Sept. 18 listening to earlier than the Home Monetary Providers Subcommittee on Digital Property.
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 acquired a Wells discover from the SEC’s Enforcement Division in Might.
He identified that the SEC workers had been usually 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 dearth of clear steering on which digital asset transactions qualify as funding contracts stays a basic subject. This uncertainty has led to a number of lawsuits by the SEC in opposition to crypto companies, additional hampering business progress.
Gallagher added that “regulation by enforcement” harms American shoppers in search of higher entry to digital property. 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-Property (MiCA) regulation offers 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 below Part 36 of the Securities Alternate Act of 1934 to create a framework for registering and overseeing platforms that facilitate buying and selling in digital property deemed funding contracts.
He famous this rulemaking might handle key points resembling registration, shopper protections, custody necessities, and transaction reporting. These measures, he added, might have mitigated a few of the injury attributable to the FTX collapse in 2022.
Congress roles
Gallagher emphasised the necessity for Congress to ascertain a transparent, complete regulatory framework for digital property.
He argued that solely Congress can present the long-term regulatory readability wanted to make sure token issuers, exchanges, and different market individuals can function with out concern of fixed enforcement actions.
Such readability, based on Gallagher, is essential for sustaining the US’s management in accountable blockchain innovation and well-regulated digital asset markets.
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