Democratic lawmaker demands hearing over SEC's crypto policies
Securities and Exchange Commission (SEC) Chair Paul Atkins made overhauling the agency's approach to the cryptocurrency industry one of his highest priorities when he replaced Gary Gensler.
Gensler had long been seen as an adversary to the crypto industry, having taken a hard-line approach to enforcement, describing it in a speech in 2021 as "the Wild Wild West."
“This asset class is rife with fraud, scams, and abuse in certain applications,” he said. “There’s a great deal of hype and spin about how crypto assets work. In many cases, investors aren’t able to get rigorous, balanced, and complete information.”
The SEC under Gensler brought crypto-related charges against everyone from Coinbase (COIN) to Robinhood (HOOD) and even Kim Kardashian.
However, once Atkins replaced Gensler, the cases against both Coinbase and Robinhood were almost immediately dropped.
Last Summer, Atkins announced the launch of Project Crypto, an initiative aimed at modernizing securities regulations to allow for the inclusion of cryptocurrencies.
Central to Atkins’ views is what he calls “token taxonomy” in order to identify the cryptocurrencies that should be designated as securities.
In a speech in November, Atkins reiterated what he has said on multiple occasions, which is that he believes “most crypto tokens trading today are not themselves securities.”
This represents a significant break from how Gensler viewed the asset class, which is why the SEC under Gensler charged Coinbase with "operating as an unregistered securities exchange," among other allegations.
Coinbase had long disputed the notion that the crypto assets on its exchange constituted securities, and with Atkins the company has found an ally.
Lawmaker accuses Atkins of politicizing the SEC
However, as Atkins remakes the SEC's crypto policies, at least one lawmaker has some questions for him.
Rep. Maxine Waters, a Congresswoman from California, sent a letter to French Hill, chairman of the Committee on Financial Services for the US House of Representatives last week, asking him to bring in Atkins for an oversight hearing, pointing out that the committee has yet to hold a single hearing with Atkins.
Watkins notes that when she chaired the committee during the Biden administration, Gensler testified twice during his first year at the SEC.
Waters expressed concern about the "rapid, significant, and questionable policy shifts during the Trump Administration, largely accomplished by unilateral action" from Atkins.
Although Congress established the SEC to be independent of the president, Waters argues that the SEC has undergone a "politicization" under Atkins, where he “repeatedly frames the agency’s agenda as an instrument of the Administration.”
One of the central areas that Waters believes the Financial Services committee needs to question Atkins about has been his handling of the SEC's crypto policies.
“The SEC has terminated or stayed major enforcement actions against multiple crypto companies and individuals that had been credibly accused of major violations of our securities laws, including Coinbase, Binance, and Justin Sun,” Waters said. “In some of these cases, the defendants had announced that the SEC had terminated enforcement actions even before the Commission had taken the actual vote to do so.”
She also cited "reports" that suggest Atkins' office “took an unusually active role in negotiating an end to these cases.”
"The Committee has not scrutinized the SEC’s rationale for abandoning these matters, nor how the agency intends to deter fraud and manipulation in markets touching millions of retail investors," Waters added.