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Sen. Lummis: SEC is 'overreaching' on crypto

Sen. Cynthia Lummis (R-Wyo.) is not a fan of the Securities and Exchange Commission's crackdown on the cryptocurrency industry. Now she is vowing to block one of the agency's controversial new crypto policies.

"I think the SEC is overreaching,” she said during a wide-ranging interview with Yahoo Finance this week.

Senator Cynthia Lummis (R-WY) speaks during the Bitcoin Conference 2023, in Miami Beach, Florida, U.S., May 19, 2023. REUTERS/Marco Bello
Senator Cynthia Lummis (R-WY) speaks during the Bitcoin Conference 2023, in Miami Beach. REUTERS/Marco Bello (Marco Bello / reuters)

The SEC is in the middle of an aggressive effort to rein in the crypto industry on a number of fronts, with lawsuits pending against a number of big players including Coinbase and Binance.

One of its policies that affects the industry — issued in March 2022 as "Staff Accounting Bulletin 121" — asks that any financial firms holding customers' crypto assets do so on their own balance sheets while warning investors about the risks of safeguarding those assets. The Government Accountability Office said this week that the SEC should have sent this policy guidance to Congress for its approval.

Lummis now vows to block it from becoming binding, citing it as another example of overreach by the SEC. Lummis, who believes she can garner support for this effort in the next few weeks in the Senate and the House, said the bulletin could hurt consumers if a digital asset custodian were to collapse.

"It's not a common-sense rule," Lummis told Yahoo Finance Live in an interview. "It was issued as a staff bulletin, but the bulletin is binding."

Lummis said she is working on other fronts to provide the crypto industry with more clarity in Washington, including a sprawling piece of crypto legislation co-sponsored with Sen. Kirsten Gillibrand (D-N.Y.) that would outline how the sector is regulated.

Sen. Kirsten Gillibrand, D-N.Y., arrives for a classified briefing for senators on Israel and Gaza at the Capitol in Washington, Wednesday, Oct. 18, 2023. (AP Photo/Mariam Zuhaib)
Sen. Kirsten Gillibrand, D-N.Y. (AP Photo/Mariam Zuhaib) (ASSOCIATED PRESS)

Lummis said she is hopeful her legislation could pass in early 2024 and is open to taking pieces of the legislation and tucking it into other legislative packages.

In fact, that's what happened in recent weeks when a portion of her bill that deals with terrorist financing was tucked into the Senate's defense spending package, or National Defense Authorization Act. That legislation now getting ironed out with the House.

"It is something that is so clearly needed as illustrated by the concerns that Hamas is using cryptocurrency to help finance its savage treatment of Israeli civilians and military personnel," Lummis said. "It would help."

Lummis said she also supports the House Financial Service Committee’s crypto framework led by Committee Chair Patrick McHenry (R-N.C.).

U.S. House Speaker Pro Tempore Rep. Patrick McHenry (R-NC) arrives for a House Republican candidates forum ahead of their decision over the next GOP House Speaker nominee on Capitol Hill in Washington, U.S. October 24, 2023. REUTERS/Jonathan Ernst
Rep. Patrick McHenry (R-NC). REUTERS/Jonathan Ernst (Jonathan Ernst / reuters)

Whichever body is able to move legislation first, she said, is fine with her.

"Sen. Gillibrand and I see the small differences between the House and the Senate versions specifically related to stablecoins and we know they're resolvable," she said. "So I think we're going to be able to get to a resolution on stablecoins now that the House has a new speaker and they're again open for business."

Lummis said she’s been working with McHenry to get the stablecoin component of her bill moving. She added that she thinks they can iron out small differences and may be able to put something out before the end of the year.

"We're crying out for a clear regulatory framework here," said Lummis.

Click here for the latest crypto news, updates, values, prices, and more related to bitcoin, ethereum, dogecoin, DeFi, and NFTs

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