Coinbase, a16z, Blockchain Association Push Back on SEC’s Proposed Custody RuleSEC Chair Gary Gensler’s position could be on the line as US Representative Warren Davidson announced his plan to introduce legislation removing the SEC chief from his role. On April 15, Davidson tweeted his intentions in response to Coinbase’s legal chief, Paul Grewal, following the SEC’s recent announcement about revisiting the proposed redefinition of an “exchange.”
The crypto-friendly congressman declared, “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).”
SEC’s proposed rule amendments under fire
Gensler stated in an April 14 meeting that the proposed rule amendments could benefit investors and markets by subjecting certain brokers to additional regulatory scrutiny and “modernizing” rules that define an exchange. Similar amendments were proposed in January 2022, drawing criticism from crypto advocacy groups for potentially jeopardizing participation in the space.
SEC Commissioner Hester Peirce, known as “Crypto Mom” for her pro-crypto stance, voiced her disapproval of the new proposed rule amendments in an April 14 statement. She warned that “stagnation, centralization, expatriation, and extinction are the watchwords” of the SEC’s latest move. Peirce argued that, unlike in the past, the SEC had expanded its reach to address nonexistent problems.
Peirce calls for a different approach
Peirce further criticized the SEC’s refusal to adapt regulations to accommodate new technologies and business practices. She accused the agency of using the “notice-and-comment rulemaking process” as a threat. She argued that a concept release should have been issued instead, given the ambiguity and scope of the new proposed rule changes and the SEC’s “limited understanding” of the space.
Over the past few years, the SEC has launched high-profile actions against crypto companies such as Ripple, LBRY, and Coinbase over alleged violations. The agency has also targeted staking and stablecoins, leading critics to claim that the SEC uses enforcement actions to develop the law on a case-by-case basis rather than establishing clear regulatory laws.
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