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Dan Gallagher criticizes SEC’s unclear regulatory approaches to cryptocurrency regulation.
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Robinhood had over 12 meetings with SEC, but received a Wells Notice despite efforts.
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Gallagher demands a clear and comprehensive regulatory framework in order to support U.S. Innovation.
Dan Gallagher is the Chief Legal Officer of Robinhood and a former SEC commissioner. He testified in front of the U.S. House Financial Services Subcommittee on Digital Assets. He criticized the SEC’s “scorched-earth” approach to cryptocurrencies.
Gallagher revealed that Robinhood met with the SEC over a dozen times in an attempt to register but was still issued a Wells Notice by the enforcement division.
Gallagher said that Robinhood would be registered with the SEC as a digital assets broker-dealer. Robinhood claimed that it had dedicated resources and efforts to implement the Commission’s regulations. They spent more than a year asking for guidance from the SEC. The SEC, however, dismissed all these efforts and instead sent a Wells Notice to Robinhood.
Gallagher stated that the agency failed to provide feedback and clarity to companies. Robinhood had also planned to operate within SEC’s framework, limiting coins it listed and excluding ICOs. The SEC’s actions have highlighted the issue of ambiguity in the regulation of cryptocurrency.
Read also: Robinhood Acquires Bitstamp For $200 Million Despite SEC Threat
Concerns about Regulation by Enforcement
Gallagher also expressed concerns about the SEC’s enforcement-first approach, rather than having a set rules to govern digital asset. He said that this was harmful to American consumers, and also dampening innovation.
Gallagher emphasized that other regions such as the European Union have provided clear guidelines which define the legal environment, encouraging innovation. The U.S., on the other hand, has somehow lost its place in the digital assets industry.
The testimony also touched on recent legal decisions that questioned the SEC’s action. Gallagher cited federal bench judges that criticized the SEC’s litigation strategy, which introduced biases to the process. This lack of direction is causing confusion among the services that operate in the cryptocurrency market, as well as end-users.
Call for Regulatory Framework
Gallagher has asked Congress to create a regulatory framework in order to ensure that digital assets are handled properly. He pointed out that the SEC had the legal authority to create a temporary set rules since 1996, but did not do so. He suggested that the Commission set standard guidelines for platforms who are interested in trading digital assets.
Gallagher’s testimonies highlighted Robinhood’s efforts to comply SEC regulations, and his disappointment at the agency’s current approach. He called for greater clarity and a regulatory structure that supports innovation in the U.S. market for digital assets without stifling its growth.
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