Lummis Warns U.S. Lagging in Crypto Regulation vs. EU

• U.S. lags behind European Union in crypto regulation, Lummis urges Congress to act.
• Lummis criticizes SEC’s “regulation by enforcement” approach under Chair Gensler.
• She endorses Tim Scott for Senate Banking chair to improve crypto regulation.

During her interview on CNBC’s Squawk Box, Senator Lummis clearly articulated her worries about the U.S. lagging behind the European Union in cryptocurrency regulation. She sees this as a threat to U.S. dominance in the global financial market and urges Congress to take a more active role.

The EU started to regulate effectively in January 2023. We are behind and the United States should never let other countries get ahead of us with regard to financial services, Lummis declared.

Critique of SEC’s Current Strategy

Lummis took a dig at the SEC’s current approach under Gary Gensler as well. She characterizes the same as “regulating by enforcement.”

She argued that this method leaves industries without clear rules ultimately leading to legal uncertainties and stifling innovation. With that she also expressed the need for Congress to create an all-encompassing regulatory framework. Specifically she emphasized that assets like Bitcoin and Ethereum should be classified clearly as commodities.

Anticipating Political Shifts

Lummis also pointed to the possibility of changes after the 2024 elections more so if Republicans take control of the Senate. She endorsed Tim Scott for the Senate Banking Committee chair in the belief that his leadership would promote a more structured approach to digital asset regulation.

Concurrently, SEC Chair Gary Gensler has gone on record in his belief that investor protection should be the priority. He compared regulatory frameworks to traffic laws in the context of how they’re both designed to create trust and safety. This fundamental disagreement between Lummis and Gensler shows the larger debate on how to balance innovation with regulation in the crypto industry.