Lawmakers Praise SEC Moves to Shift Crypto Policy

In a letter to SEC Acting Chair Mark T. Uyeda, House Republicans praised recent efforts to shift the SEC's stance on crypto, stating that "there is renewed hope that the SEC will turn a corner on its outwardly hostile stance toward the digital asset ecosystem."

The lawmakers encouraged the SEC to abandon the proposed "Safeguarding Advisory Client Assets" rule and recommended that the SEC instead "start fresh with any efforts to provide clarity regarding custody requirements for digital assets." The lawmakers also suggested withdrawing the "Amendments Regarding the Definition of 'Exchange' and Alternative Trading Systems (ATSs)" proposal, arguing that it could impose strict securities exchange regulations on decentralized finance protocols and software developers, with no clear way to comply.

Further, the lawmakers requested that the SEC update its 2019 "Framework for Investment Contract Analysis of Digital Assets," arguing that "[w]hile the framework identifies several distinct factors and additional sub-factors that should be considered under the Howey test," it lacks clarity on how those factors should be weighed or combined to determine a digital asset's status.

In a letter to David Sacks, the recently appointed "Crypto Czar," Senator Elizabeth Warren criticized the SEC for dropping lawsuits against crypto firms and for SEC Acting Chair Mark T. Uyeda's assertion that most meme coins are not securities, cautioning that "the SEC statement could 'shield companies and individuals that create meme coins from potential litigation.'"