Robinhood’s Chief Legal Officer, Daniel Gallagher has come out with a strong message against the US crypto regulation, saying that the nation is slowly losing its command of the digital asset market. In a written statement for a Sept. 18 hearing before the House Financial Services Subcommittee on Digital Assets, Artificial Intelligence and Digital Assets, Gallagher blasted the SEC’s “scorched earth” regulatory strategy involving crypto markets.
The US is going to be the loser, as we are driving it offshore due to suppression of innovation and enforcement via investments and businesses saying, “the SEC won’t let me”.
The SEC’s “scorched earth” approach dampens the US crypto industry.
While Gallagher makes some valid points, the crux of his argument seems to be the SEC’s “scorched earth” policy. As per Gallagher, the absence of prominent definitions by the SEC regarding which digital assets qualify as investment contracts has resulted in many cases against crypto firms, which has created extra hurdles to growth in the industry.
“It is regrettable that the SEC has not been forthcoming in approaching companies such as Robinhood regarding such regulatory frameworks, for the harm it is causing American consumers and the negative impact it is having on blockchain innovation and technology,” Gallagher said.
Robinhood joined more than a dozen meetings and calls with the SEC in over 18 months but was issued a Wells notice by the Commission’s Enforcement Division in May; thus, Gallagher extended the lack of communication and clarity as a systemic problem that affects the whole US crypto market. Gallagher also discussed the US’s fragmented landscape compared to the European one, where MiCA is a more coherent regulation of digital assets. “While Europe is fostering innovation, the US is falling behind, and it’s due in large part to the SEC’s heavy-handed actions,” Gallagher said.
US Losing Edge in US Crypto Markets
The rules that have been in operation from the SEC have had a negative effect on the US crypto market, gradually pushing it off its competitive position internationally regarding cryptocurrencies. When commenting on the effects of SEC regulation on the crypto industry, Gallagher said this failure, along with continued assaults on decentralized finance firms, is forcing many firms to move elsewhere. Leaving American companies uncertain about what the SEC might consider next in its enforcement strategy is a gamble no organization should take, as Gallagher warned during his testimony.
Advertisement Banner
Gallagher pointed out that this situation leaves organizations in a regulatory no man’s land, making Europe and other regions set up their bases in crypto. For example, Europe’s new MiCA legislation gives crypto companies a ‘one-size-fits-all’ rulebook and consumer safeguards that do not stifle innovation. However, the US’s herding and enforcement-based strategy is considered to be out of place for the firms planning to invest more or diversify their business operations in the United States.
Gallagher Condemns the SEC and Congress for Not Taking Action
According to Gallagher, the country has another opportunity to become the world’s leading centre of crypto innovation. To this end, he has recommended that the SEC leverage the provision of section 36 of the Securities Exchange Act of 1934 to create a rule on how to register and regulate the trading platforms for digital assets.
On registration, consumer protection, custody requirements and transaction reporting, this framework could be in place. Gallagher also thought that such regulations could have saved some losses after FTX failure in 2022. However, as Gallagher pointed out, Congress must provide definitive direction on regulating cryptocurrencies in the long term.
Despite the fact that Gallagher’s reason speaks on the side of the need to act, it corresponds to the general sentiment that the US may lose its status for hosting cryptocurrencies within the existing legal framework.
Conclusion: Urgent Action Needed to Save US Crypto Leadership
Therefore, Gallagher’s testimony also shows the nonexistence of a positive attitude toward the current state of regulation of cryptocurrencies in the USA, which has been deteriorated by the aggressive actions of the SEC. However, not only does the US crypto face the possibility of losing competitiveness in crypto, but it has most likely already begun to lose ground thanks to uncomfortable and unstable regulation.
Therefore, referring to Gallagher, the SEC and Congress should act more actively to search for solutions for these problems to avoid the degradation of the USA’s position in the international digital asset markets. And as Europe and other regions continue to move forward, it is now or never for the US if it wants to stay ahead of the crypto game. Keep following TheBITJournal to keep an eye on US crypto market.
The price predictions and financial analysis presented on this website are for informational purposes only and do not constitute financial, investment, or trading advice. While we strive to provide accurate and up-to-date information, the volatile nature of cryptocurrency markets means that prices can fluctuate significantly and unpredictably.
You should conduct your own research and consult with a qualified financial advisor before making any investment decisions. The Bit Journal does not guarantee the accuracy, completeness, or reliability of any information provided in the price predictions, and we will not be held liable for any losses incurred as a result of relying on this information.
Investing in cryptocurrencies carries risks, including the risk of significant losses. Always invest responsibly and within your means.
