tl;dr
House Democratic staffers accuse the SEC of political bias and breaking precedent by denying them written technical assistance on the CLARITY Act, a new crypto regulation bill, while providing it to Republicans. The SEC typically offers apolitical technical analysis to lawmakers to clarify the impac...
House Democratic staffers have accused the SEC of partisan behavior by denying them written technical assistance on the CLARITY Act crypto regulation bill while providing it to Republican lawmakers.
Traditionally, the SEC offers apolitical technical analysis to lawmakers to clarify how pending legislation could impact the agency and financial markets. However, Democrats on the House Financial Services Committee claim they were rebuffed when requesting the same detailed written analysis that Republicans reportedly received.
The SEC described such documents as privileged and has not directly addressed the claims of selective assistance. Democrats expressed concerns that this departure from precedent undermines informed policymaking, especially given the CLARITY Act’s significant potential to reshape crypto regulations and the SEC’s role.
On a recent call, Democratic staffers felt the SEC did not fully address their questions about how the bill might affect traditional securities markets beyond crypto. This perceived lack of cooperation has prompted House Financial Services Committee Ranking Member Maxine Waters to plan a formal request for written analysis from SEC Chair Paul Atkins, similar to the review provided for a previous version of the bill.
Democrats worry the CLARITY Act could create regulatory loopholes that allow traditional finance entities to evade SEC oversight simply by adopting blockchain technology. They argue the SEC typically aims to remain technology-neutral to prevent rules from becoming obsolete as technology evolves.
The legislative tensions come as the bill's markup is scheduled soon, with Republicans and some pro-crypto Democrats largely supportive, but others expressing hesitation amid these SEC conflicts and concerns over potential loopholes.
One Democratic staffer summarized the frustration: lawmakers cannot fully understand and improve the bill without agency feedback, yet that crucial input is being denied. This situation highlights growing partisan strains in crypto regulation efforts and could influence the bill’s future momentum in Congress.