Democratic Party members of the U.S. House Committee on Financial Services were handed a memo instructing them to back the party’s position on crypto regulation moments before the commencement of the hearings on May 10. According to the party’s leaked memo, Democrats on the committee were expected to point to the Republican Party’s lack of interest in protecting investors. The memo also said the U.S. Securities and Exchange Commission (SEC) should be allowed to “continue to lead the regulation of the U.S. crypto market.”
Republicans Accused of Undermining the SEC
According to a leaked memo shared by Eleanor Terrett, a journalist with Fox Business, Democratic Party members on the U.S. House Committee on Financial Services were given instructions to back the party’s position on crypto regulation when the committee met on May 10. In a Twitter post, Terrett claimed that the memo stating this had been circulated among Democrat committee members prior to the start of the hearings.
SCOOP: Prior to today's @FinancialCmte/@HouseAgGOP hearing on digital asset regulation, a memo was circulated among Democrat Committee members.
It contained "key messages" for the @FSCDems to stick to including supporting the @SECGov's total authority over crypto regulation,… pic.twitter.com/AabSfwquaw
— Eleanor Terrett (@EleanorTerrett) May 10, 2023
As shown in the shared leaked memo, Democrats on the committee were expected to reiterate six key messages during the hearings. The first of these messages is the party’s argument that Republicans on the committee are hell-bent on “carving out space for the Commodities Futures Trading Commission (CFTC) in crypto.” Doing this, according to the memo, meant that Republicans are not only undermining the SEC but are also exhibiting a lack of interest in “protecting investors and consumers.”
The second and third messages claimed Republicans on the committee have no interest in averting an economic catastrophe that will befall the U.S. if the debt ceiling is not raised. According to the memo, Republicans’ only interest is passing digital asset laws which neither the Biden Adminstration nor investors have asked for.
As has been reported by Bitcoin.com News, the Biden Adminstration and U.S. regulators have hardened their stance on crypto since the start of 2023. And through the chairman of the U.S. Securities and Exchange Commission Gary Gensler, the administration has targeted crypto entities that are accused of offering securities without the requisite approval.
‘Mass Non-Compliance With Existing Laws’
The SEC’s unclear definition of what constitutes a security as well as the clampdown on crypto entities has so far forced entities like the crypto exchange Coinbase to mull relocating to jurisdictions with less hostile regulatory environments. However, according to the Democratic Party’s leaked memo, it is crypto entities’ refusal to comply with the laws which is the problem. The leaked memo’s message number 4 said:
The problem isn’t ambiguity — it’s mass non-compliance with existing laws, and crypto companies can’t be let off the hook. The U.S. has a regulatory system that has worked well and sustained mass innovation in the financial system for decades. We can’t invent new accommodating regulatory structures simply because crypto companies refuse to follow clear rules of the road.
Concerning the under-fire SEC chairman, the memo urged Democratic committee members to highlight how Gensler and his enforcement team have worked to protect investors and how Republicans are seeking to “reverse course and tie the hands” of the regulator. According to the Democrats, the SEC must be allowed to “continue to lead the regulation of the U.S. crypto market.” The U.S. Congress should play its part by providing the SEC with the resources it needs, the memo added.
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