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The Digital Chamber sharply criticizes the SEC’s “regulation by intimidation” strategy.

The Quality Review Board’s issuance of a Wells Notice to Robinhood Crypto was met with sharp criticism from the Digital Chamber, the trade association for the digital assets sector. This is part of a chain of similar regulatory moves targeting cryptocurrency players such as Uniswap and Consensys. The Chamber calls these actions a complete overreach of the SEC’s regulatory authority, occurring without a clear congressional mandate.

One strategy that Robinhood Crypto used in its regulatory engagement was to create a dedicated broker-dealer designed for crypto operations. However, despite this proactive approach, the Digital Chamber views the SEC’s decision to issue a notice about Wells as a threat to the development and protection of investors in the digital asset space.

Concerns about SEC legislative overreach

The Digital Chamber actively participated in the legislative process, filing numerous amicus briefs to establish clear regulatory lines regarding digital assets. They argue that the SEC’s actions do not align with Congress’ ongoing legislative efforts to regulate the sector. In their view, this not only constitutes a jurisdictional error, but also undermines the direction of legislation promoting transparency and development of the industry.

The SEC’s aggressive regulatory approach is also considered paradoxical to its very duty to rescue investors. By focusing on key segments of the digital economy, the SEC could distance itself from innovative companies and threaten the financial independence of millions of people who interact with digital assets. Therefore, tThe Chamber’s statement calls for immediate legislative action to address these jurisdictional issues and create a more favorable regulatory environment for digital assets.

Calls for Congressional involvement

In response to these regulatory challenges, the Digital Chamber is calling on Congress to investigate the SEC’s behavior. They are calling on SEC Chairman Gary Gensler to testify and justify what they call a “regulation by intimidation” program. This position is also supported by House Majority Whip Tom Emmer, who has criticized the SEC’s approach to regulating digital assets.

Some cryptocurrency lawyers have called the continued issuance of Wells notices to companies like Robinhood, Uniswap and Consensys a “carpet bombing campaign” against the crypto sector. They argue that this approach could overstretch the SEC’s powers and cause serious operational and legal problems for the companies involved.

Industry experts raise doubts

The issue of SEC strategy was also discussed among leading legal experts in the cryptocurrency industry. According to Jake Chervinsky, Variant Fund’s legal director, the SEC’s numerous well notices are nearly impossible to enforce and indicate scare tactics rather than enforcement. Cooley LL’s Rodrigo Silva-Herzog discussed the broad scope of the SEC’s approach and commented that it may be beyond its capabilities and mandate.

Robinhood executives also denied the SEC’s accusations as part of their defense, saying they were confident that the digital assets offered on their platform were not securities.

At the same time, Adam Cochran expressed his concerns about the SEC’s approach to Platform X, pointing out that it discourages fintech innovation in the United States. Cochran says the SEC’s lack of clear guidance and retroactive enforcement actions are hampering investment and growth in the U.S. fintech sector.

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