Rep. Tom Emmer’s Amendment Limits SEC’s Crypto Enforcement Funding

Pro-crypto Congressperson Tom Emmer has made a significant move to limit the U.S. Securities and Exchange Commission (SEC) from using government funds for crypto enforcement actions. On November 8, Emmer attached an amendment to HR 4664, the Financial Services and General Government Appropriations Act, which is also known as the federal budget. The amendment, which passed without opposition, restricts the SEC from utilizing funds for enforcement actions related to digital asset transactions until Congress enacts legislation granting it jurisdiction over the crypto domain.

Emmer’s initiative was in response to what he views as the SEC’s overstepping of its regulatory powers under the leadership of its chair, Gary Gensler. As per Emmer’s statements, the SEC has pursued numerous enforcement actions against the digital asset industry, despite not finalizing a single rule or regulation for the industry. His amendment, therefore, serves as an attempt to end what he describes as a “pattern of regulatory abuse” that is hindering American innovation and capital formation.

Despite the advancement of the amendment, the House’s budget, in which it’s included, will still need to undergo a reconciliation committee before it’s passed. Furthermore, there also exists a need for a balance between crypto regulation and promotion of innovation, as highlighted by the Department of Justice, the Treasury, and the Treasury’s Office of Foreign Asset Control’s call for more tools to fight against the illicit use of cryptocurrency for terrorism funding.

In contrast to Emmer’s stance, SEC Chair Gensler has shown some positive sentiments towards the crypto industry. In an interview at the annual DC Fintech Week conference, Gensler stated that whoever acquires the remains of the collapsed crypto exchange FTX is welcome to revive the brand, provided it operates within the law. However, his perspective comes with a call for increased compliance with securities laws, noting the industry’s “wide-ranging non-compliance” as a major issue.

Following this, the fate of the amendment and its implications on the SEC’s authority and the future of crypto regulation are yet to be determined. It is also noteworthy that at the same time, different crypto-related bills, including the Financial Innovation and Technology for the 21st Century Act, the Blockchain Regulatory Certainty Act, and the Clarity for Payment Stablecoins Act, among others, are awaiting Congressional attention.

With the federal budget set to expire on November 17, the House and Senate proposals must be reconciled or temporary funding approved to avoid a government shutdown. As such, the future of the crypto industry’s regulatory landscape hangs in the balance, with the outcome heavily dependent on forthcoming legislative actions.