U.S. House Hearing “Current Securities Law Cannot Regulate Cryptocurrency”
Representative Brian Style speaking at a U.S. House hearing on the 9th (local time) (Source: House committee)
The current U.S. Securities Act does not reflect the characteristics of digital assets, and it has been argued that it is virtually impossible for cryptocurrency projects to properly register under existing regulations.
At a U.S. House hearing held on the 9th (local time) titled 'The Future of American Innovation and Digital Assets: Revising Securities Laws for the Digital Age,' legal experts, including Rodrigo Seira, special counsel at Cooley LLP, appeared as witnesses and criticized the SEC's (Securities and Exchange Commission) current regulatory approach for failing to keep up with the realities of the cryptocurrency industry.
Seira emphasized, “The current Securities Act does not provide a realistic framework for regulating cryptocurrencies,” adding that the idea that cryptocurrency projects can register with the SEC is far removed from reality. He also explained that “projects attempting to register tokens have invested substantial resources and effort, but most have failed or are barely hanging on in an uncertain regulatory environment.”
While acknowledging that cryptocurrency projects aimed at fundraising could fall under the Securities Act, he pointed out that “registration is not a one-time process and comes with ongoing disclosure and operational obligations afterward.” This highlights the mismatch between traditional stock registration models and cryptocurrencies.
Representative Brian Style, who chaired the hearing, stated, “The current regulatory barriers were created during previous administrations, and legislative efforts to reform this under President Trump are underway.” He said, “We are now moving to correct the regulations.”
Indeed, last week, the House Financial Services Committee passed the 'STABLE Act,' which regulates payment stablecoins linked to legal tender like the U.S. Dollar, and a month ago, the Senate Banking Committee approved the 'GENIUS Act,' which includes requirements like AML (Anti-Money Laundering) compliance and reserve requirements. Representative Style further emphasized, “The next step is comprehensive legislation covering the overall structure of the digital asset market,” and stated, “It will be completed within the year.”
Lately, Representative Ro Khanna also mentioned at a digital asset conference that related legislation is expected to pass finally within this year. This hearing is interpreted as a signal that the U.S. is actively establishing the direction as legislators are re-designing the institutional framework surrounding cryptocurrency regulation.