In recent times, Securities and Exchange Commission (SEC) Chair, Gary Gensler, has been at the forefront of the crypto-asset industry’s regulatory scrutiny, which has resulted in growing dissent from members within his own agency. United States Representative Warren Davidson is the latest to retaliate against Gensler’s crusade and is introducing legislation to remove him as the SEC boss in a bid to “correct a long series of abuses.”
The SEC’s Unconstitutional Overreach
The announcement comes after the SEC said it would “modernize” the proposed redefinition of an “exchange” under the agency’s rules, which could also encompass crypto market participants in decentralized finance (DeFi). The SEC Chair stated that rule amendments could be advantageous to both investors and markets since it would entail bringing certain brokers under the purview of additional regulatory scrutiny.
The proposed amendments would require these systems to register as national securities exchanges or broker-dealers and comply with Alternative Trading System (ATS) regulations. The SEC further added that the commission’s current rules also cover DeFi.
Opposition
Gensler’s proposal and the subsequent announcement targeting DeFi are in the crosshairs of many crypto advocates who have raised concerns about the agency’s overreach. This prompted Coinbase’s legal chief, Paul Grewal, to declare his intention to have Gensler ousted from his role for a continued crackdown.
United States Representative Warren Davidson also chimed in and tweeted, “To correct a long series of abuses, I am introducing legislation that removes the Chairman of the Securities and Exchange Commission and replaces the role with an Executive Director that reports to the Board (where authority resides). Former Chairs of the SEC are ineligible.”
Nonprofit blockchain advocacy group Coin Center also hit back at the SEC, deeming its approach as “unconstitutional.” On the regulatory front, the SEC boss found himself again under fire from Commissioner Hester Peirce, who filed a dissent against Gensler’s policy move.
DeFi Crackdown
The latest decision is far from the first salvo in the assault on DeFi. The sector is seeing relentless crackdown attempts, which industry advocates believe to be “extrajudicial” in nature. Last month, Sushi DAO and Head Chef Jared Grey were served with a subpoena by the SEC.
More recently, the US Treasury issued a first-of-its-kind illicit finance risk assessment report on DeFi. These developments are a clear indication that regulators are doubling down on their efforts to bring DeFi under regulatory oversight, which has sparked concerns among DeFi advocates.
Conclusion
Gary Gensler’s relentless regulatory scrutiny in crypto has led to growing pushback from industry experts and politicians alike. While the SEC aims to modernize the rules and bring certain brokers under regulatory scrutiny, many believe that it is an unconstitutional overreach. The ongoing DeFi crackdown by regulators has sparked concerns among DeFi advocates, who believe that it may stifle innovation in the industry.
