McHenry cited the need for a special, separate entity to regulate virtual assets. McHenry’s comments come amid growing scrutiny of the SEC and other U.S. regulators in their alleged mishandling of the growing crypto market. To date, the United States lacks any comprehensive federal laws covering crypto.
Digital assets neither a commodity nor a security
In an interview with Punchbowl, Rep. McHenry mentioned that we need to define digital assets properly. He believes that cryptocurrency is neither a commodity nor a security, and he presents Bitcoin (BTC) as the embodiment of it.
McHenry suggests that evolving digital assets industry needs a separate regulatory body other than SEC and CFTC. However, he asserts that it’s completely the role of Congress to evaluate a definition of digital assets. It is important to do so as there is no Federal clarity over it for now while there is no specific regulatory body to keep an eye over it.
He also criticized existing regulators, in that they lacked an understanding of the rapidly growing space.
I fundamentally think that the Securities Exchange Commission and the CFTC lack that capacity to well regulate this new innovation
Will SEC vs Ripple will change the regulatory scene?
The long running lawsuit between U.S SEC and Ripple can be termed as the perfect example of this issue. As the Commission claims that Ripple’s native token XRP is a “security” while payment protocol asserts that it is not.
The controversial case has seen many hidden exhibits unfolding during the trial. Ripple and other defendants even claimed that SEC officials have forcefully dragged the XRP token into such a lawsuit while serving other cryptocurrencies a free pass. Meanwhile, the recently filed summary judgment signals that this dispute might end by 2023. The outcome of this lawsuit will eventually provide a changed regulatory outlook for the watchdogs.
Rep, McHenry’s suggestions can gain the support of other digital industry giants. Recently, SEC chief Gary Gensler insisted that Cryptocurrency trading platforms should be registered with the commission.