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 laws, citing over a dozen conferences and calls over 18 months. Nonetheless, regardless of these efforts, the corporate acquired a Wells discover from the SEC’s Enforcement Division in Might.
He identified that the SEC workers have been usually unresponsive to Robinhood’s requests for steerage on shifting 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 steerage on which digital asset transactions qualify as funding contracts stays a elementary problem. 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 customers in search of larger entry to digital property. It additionally stifles innovation in blockchain and erodes the US’s aggressive edge in world digital asset markets.
He contrasted the US with Europe, the place the Markets in Crypto-Belongings (MiCA) regulation supplies a unified framework for crypto markets, enabling innovation to flourish abroad.
Subsequent steps for SEC
Gallagher instructed that the SEC might use its present authority below 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 property deemed funding contracts.
He famous this rulemaking might tackle key points akin to registration, shopper protections, custody necessities, and transaction reporting. These measures, he added, might have mitigated a few of the harm brought on by the FTX collapse in 2022.
Congress roles
Gallagher emphasised the necessity for Congress to determine 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 worry 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.