Home Crypto Exchanges US Senator Cynthia Lummis Criticizes SEC’s Kraken Lawsuit, Calls for Clear Crypto Rules

US Senator Cynthia Lummis Criticizes SEC’s Kraken Lawsuit, Calls for Clear Crypto Rules

US Senator Cynthia Lummis Criticizes SEC's Kraken Lawsuit, Calls for Clear Crypto Rules

In a recent turn of events, US Senator Cynthia Lummis has taken aim at the United States Securities and Exchange Commission (SEC) for its regulatory actions against Kraken, the San Francisco-based cryptocurrency exchange. The SEC’s lawsuit, filed on November 20, alleges that Kraken operated an unregistered trading platform, sparking a response from the senator who criticized the lack of clear crypto rules.

SEC Lawsuit Against Kraken and Senator Lummis’s Critique

The SEC’s lawsuit accuses Kraken of operating as an unregistered securities exchange, broker, and clearinghouse, claiming the exchange violated securities regulations designed to protect investors. The regulatory body asserts that Kraken’s internal controls allowed the commingling of $33 billion in client assets with its own, posing a risk to users. Kraken, in response, vehemently disagrees with the SEC’s claims, stating its intention to vigorously defend its position in court.

Senator Cynthia Lummis took to X (formerly Twitter) to express her dissatisfaction with the SEC’s approach, specifically highlighting the absence of explicit cryptocurrency rules. She emphasized the importance of a precise regulatory jurisdiction and called on Congress to establish clear rules for the SEC regarding the classification of assets as either security or commodity. The senator introduced the Lummis-Gillibrand Responsible Financial Innovation Act, aiming to provide a regulatory framework and curb what she perceives as the SEC’s overreach.

Senator Lummis’s Tweet:
“The SEC cannot continue ruling by enforcement. Crypto asset companies have repeatedly tried to get guidance from the SEC only to be hit with enforcement actions, causing unnecessary harm to consumers.”

Senator Lummis’s Call for Clear Crypto Rules

Senator Lummis’s critique centers on her belief that the SEC’s enforcement actions lack a foundation of clear and explicit rules for the cryptocurrency industry. The senator contends that crypto companies seeking guidance are met with enforcement actions, creating uncertainty and potential harm to consumers. She calls for Congress to pass a regulatory framework that provides the SEC with specific rules to distinguish between security and commodity assets.

Senator Lummis’s Proposal:
“It is time for Congress to pass a regulatory framework to provide clear rules to the SEC on what is a security and what is a commodity. The Lummis-Gillibrand Responsible Financial Innovation Act will rein in the SEC and allow financial innovation to thrive in the United States.”

Significance of SEC’s Complaint and Kraken’s Response

Kraken, in a detailed blog post, refutes the SEC’s claims, asserting that the complaint lacks allegations of fraud, market manipulation, customer losses, or hacking. While large sums of money are mentioned in the complaint, Kraken underscores that the SEC does not claim any losses or misuse. The exchange argues against the SEC’s technical rationale, stating that it needs specific securities licenses, contending that the digital assets it provides do not fall under the category of investment contracts.

Kraken’s Response:
“This is incorrect as a matter of law, false as a matter of fact, and disastrous as a matter of policy.”

The Broader Implications and Urgency for Crypto Legislation

The ongoing dispute between the SEC and Kraken underscores broader issues within the crypto sector. Companies seeking regulatory guidance find themselves at risk of enforcement actions, creating a challenging landscape for both businesses and consumers. Senator Lummis’s call for more specific restrictions reflects the growing urgency for organized crypto legislation, providing clarity and regulatory certainty.

As the industry navigates these complexities, the SEC’s actions against Kraken and similar cases with other crypto companies raise questions about the need for a comprehensive regulatory framework. The Lummis-Gillibrand Responsible Financial Innovation Act, if enacted, could play a pivotal role in shaping the future regulatory landscape for digital assets in the United States.

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Julie J

Julie is a renowned crypto journalist with a passion for uncovering the latest trends in blockchain and cryptocurrency. With over a decade of experience, she has become a trusted voice in the industry, providing insightful analysis and in-depth reporting on groundbreaking developments. Julie's work has been featured in leading publications, solidifying her reputation as a leading expert in the field.

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