Senator Lummis Takes Aim at SEC, Demands Clear Crypto Rules

Cynthia Lummis, a U.S. Senator and pro-crpypto advocate, has criticized the SEC’s approach to cryptocurrency regulations, claiming it hinders the industry’s growth.

In a recent interview, she expressed concerns over SEC Chair Gary Gensler’s reliance on enforcement actions rather than providing clear guidelines, which has led to confusion among digital asset companies and ongoing legal challenges.

Lummis highlighted the need for regulatory clarity to keep pace with innovations in the crypto sector, noting that the U.S. risks falling behind other markets, like the EU, which established comprehensive crypto laws last year. She believes that Bitcoin and Ethereum should be classified as commodities under the oversight of the CFTC, rather than being treated as securities by the SEC.

The Senator urged Congress to legislate a clear framework defining the roles of different regulatory bodies regarding digital assets. She mentioned that updates to the Howey Test, used to determine securities status, may be necessary due to the evolving nature of cryptocurrencies.

In contrast, Gensler maintains that the U.S. already has sufficient crypto regulations in place, emphasizing investor protection. While he acknowledges Bitcoin’s non-security status, he has not clarified Ethereum’s classification.

To address regulatory gaps, Lummis is working on a proposal with Senator Kirsten Gillibrand to revise the wash sale rule, aiming to boost the CFTC’s regulatory capabilities. Additionally, she and other lawmakers have criticized the SEC’s Staff Accounting Bulletin 121, which requires crypto custodians to categorize customer assets as liabilities, arguing it imposes unnecessary burdens on the industry.