The Securities and Exchange Commission (SEC) must ensure that its information-seeking requests to private cryptocurrency and blockchain firms are not overburdensome, unnecessary, and do not stifle innovation, U.S. Rep. Tom Emmer (R-MN) said this week.
“Crypto startups must not be weighed down by extra-jurisdictional and burdensome reporting requirements,” said the congressman, who led a bipartisan group of his colleagues in requesting clarity from SEC Chairman Gary Gensler on the SEC’s information-seeking process.
The eight lawmakers asked Gensler in a March 16 letter to provide details about the frequency and manner of its voluntary document requests to private, non-SEC regulated crypto and blockchain firms.
“We have questions regarding the SEC’s utilization of Division of Enforcement and Division of Examination authorities to obtain information related to cryptocurrency and blockchain firms,” they wrote.
The SEC’s Division of Enforcement’s manual allows the division to request the voluntary production of documents, the voluntary creation of documents, and voluntary interviews and testimonies from regulated entities, according to Rep. Emmer’s office, while the SEC’s Division of Examination also may submit requests for voluntary document production. However, the SEC has extended these requests to gather information on companies not under their jurisdiction.
In fact, according to their letter, the lawmakers wrote that there appears to be a recent trend in which the SEC employs the enforcement division’s investigative functions to gather information from unregulated cryptocurrency and blockchain industry participants in a manner that’s inconsistent with the commission’s standards for initiating investigations.
“Those authorities are better suited to the SEC’s divisions charged with seeking public commentary as part of the rulemaking process,” wrote Rep. Emmer and his colleagues, who included U.S. Rep. Darren Soto (D-FL).
To help them understand how and why the SEC is soliciting information from private firms related to cryptocurrency and blockchain, the members asked Gensler to answer numerous questions by April 29, including how many voluntary document requests the SEC has sent over the last five years to individuals, project teams, entities, or others regarding activities related to cryptocurrency, digital assets, or other uses of blockchain technology.