Brad Sherman Calls Out SEC for Crypto Enforcement Lapses

Brad Sherman’s Bold Stand

During a recent hearing, Congressperson Brad Sherman took a sharp jab at the SEC’s tactics in regulating cryptocurrency exchanges. It was no light-hearted chat; Sherman questioned whether the SEC had enough backbone to enforce current laws against major players in the crypto market.

Criticism of the SEC’s Enforcement Agendas

At the House Committee on Financial Services meeting, Sherman argued that the SEC enforcement director, Gurbir Grewal, must step up against major exchanges involved in significant transactions with XRP, which the law suggests is a security. He raised a crucial point: if XRP is indeed classified as a security, then why are these exchanges seemingly getting a free pass?

A Call for Accountability

“If XRP is a security — and you think it is, and I think it is — why are these crypto exchanges not in violation of the law?” Sherman quipped, clearly frustrated by what he perceives as a double standard in enforcement. His remarks struck a chord, suggesting that a mere promise from exchanges not to break the law again isn’t sufficient.

Responses from the SEC

Grewal cheekily dodged specific inquiries about ongoing investigations of exchanges but mentioned a case against Poloniex, a smaller exchange, for trading securities. Sherman, not to be outdone, pointedly highlighted that Poloniex is merely the ‘small fry’ when the big fish are swimming all around, referring to larger platforms like Kraken, Coinbase, and Binance US.

Tag Teaming SEC Chair and Enforcement Director

The exchanges did indeed engage in substantial XRP transactions, an activity Sherman’s reasoning led him to deem illegal. He echoed his frustration, asserting, “You know it’s a security — that means they were illegally operating a securities exchange.” It was a moment where Sherman’s zealous defense of regulatory rigor truly shone.

Budget Plans Amid Growing Market Complexity

Both Gensler and Grewal pointed out that regulation needs more muscle as the crypto landscape becomes labyrinthine. In fact, they discussed the request for $2.1 billion in FY2023 to bolster SEC capabilities, including hiring more watchdogs for the evolving market.

Legislative Proposals Brewing

In the larger scheme, Sherman isn’t alone in calling for regulatory clarity. One can’t overlook Senators Lummis and Gillibrand’s proposal to shift authority from the SEC to the Commodity Futures Trading Commission regarding digital asset markets. A bold strategic move that could revolutionize how these digital currencies are monitored.