Congress Could Use Budgeting Power to Force SEC to Provide Clarity

Friday seems like a good time for a positive story, and this bit of positive constructive criticism comes from Fox Business News reporter Eleanor Terrett, who has become something of an ally for the crypto space.

Terrett says that given Congress’ specific and detailed powers over the federal purse strings and the number of members who have decried the SEC’s heavy-handed “regulation by enforcement” policy, it has an option. Congress has the power to ban federal agencies, including the SEC, from spending funds on certain projects. 

And in this case, it could simply bar the SEC from funding any actions charging crypto companies for securities violations without a clear regulation approach. 

“I learned today that Congress has the power to ban government agencies from spending money on specific things,” Terrett said in a series of Tweets. “The omnibus spending bill for FY 2023 (one of the few pieces of legislation that has a chance of passing this year) includes provisions that prevent the @SECGov from using funds made available from appropriations to implement amendments made to Federal proxy voting rules.

“If Congress is really concerned about the SEC's regulation by enforcement approach to #crypto, why don't they add a provision that would prevent the agency from bringing cases without a clear regulatory framework in place?,” she asked.

A number of voices in the crypto community don’t have a positive view of the SEC, and some see the Commodity Futures Trading Commission (CFTC) as a better regulator, but without a clarity from Washington any regulatory regime can be abused. Terrett’s proposed solution could force the bureaucracy to come to the table in good faith.