“Crypto Is a Garden of Snakes:” Rep Sherman Backs SEC Action

• The ongoing SEC crypto enforcement actions have gained the support of United States senators.
• Policymakers are eyeing bolstered regulations against the asset class.
• SEC Chair Gary Gensler has defended the commission’s approach to the industry.

The US Securities and Exchange Commission (SEC) has championed enforcement actions against the crypto industry in recent years, marked by regulatory attacks against service providers and projects in the pursuit of oversight. The intensifying “regulation by enforcement” approach has raised questions regarding the commission’s actions, which have been criticized as hostile and aggressive. 

Despite this scrutiny, some US policymakers strongly support the commission’s actions.

SEC Crypto Enforcement Actions 

In a Tuesday, May 7 hearing over the Securities and Exchange Commission’s recent regulatory actions, Representative Brad Sherman asserted that the ongoing focus of the regulatory body on the crypto industry is not a coincidence but necessary to ensure orderliness within the financial sector.

Central to Sherman’s support was the indictment of the fallen crypto mogul Sam Bankman-Fried (SBF) for an $8 billion investor fraud, which, according to him, reflects the problematic nature of the broader industry. 

While the commission has often been accused of failing to establish clear regulations for crypto, Rep Sherman countered the claims, arguing that the industry has fought tooth and nail against the commission’s regulations in an effort to give itself a patina of legitimacy.

“The crypto industry will tell us that Sam Bankman-Fried a single snake in a garden of crypto Eden, when in fact, Crypto is a garden of snakes,” stated the congressman.

Spotlighting the commission’s battles against crypto exchanges, such as Binance , Coinbase , and Kraken , Sherman reiterated his position as one of the early advocates for specific legal actions against crypto exchanges, asserting the need to “go after the illegal securities exchanges.”

The viability of the crypto asset class as an investment option was also a focal point of discussion. He emphasized that Americans should invest more in stock markets rather than what he described as ephemeral efforts to create new currencies that rival the US dollar and other national currencies.

Sherman’s stance aligns with Chair Gary Gensler’s recent defense of the SEC’s actions against the crypto industry.

Gensler Refutes Claims of SEC’s Crypto Focus

Addressing the SEC’s oversight of the crypto market in a CNBC interview on Tuesday, the SEC chair refused claims that the commission has turned most of its attention to the industry while neglecting the actual financial markets for which it is designated.

Gensler stressed that the SEC’s recent enforcement actions are in line with the law , fueled by its responsibility to ensure that investors get the required disclosures on investment options.

Much of this field is non-compliant with the protections of our securities laws,” he stated.

The SEC chair further emphasized the industry’s challenge of scams and fraud, asserting that they threaten investors and mandate stringent complaint actions to ensure protection.

On the Flipside

• U.S. lawmakers have suggested the removal of Gary Gensler as SEC Chair.
• The latest target in the SEC’s streak of enforcement actions is retail crypto trading platform Robinhood.
• In February 2024, five U.S. senators criticized the SEC , under Gensler’s leadership, as unethical and unprofessional and called for a reassessment of its actions.

Why This Matters

Sherman’s likening of the crypto industry to a garden of snakes highlights the persistent skepticism among some policymakers, indicating the challenges that threaten regulatory clarity. Additionally, his open support for the SEC’s crypto actions contrasts the scrutiny from pro-industry advocates and may further encourage the commission’s anti-crypto stance. 

Read more about the opposition against the SEC’s actions under Chair Gensler’s leadership:
Congress Advocated to Take Action on SEC and Gary Gensler

The SEC’s inaction on Ether ETFs has caused Grayscale to bow out of the approval race, read more:
Grayscale Drops Ether Futures ETF Bid as SEC Stalls Approval