House Democrats Accuse SEC of Withholding Crypto Bill Analysis

House Democrats have accused the Securities and Exchange Commission (SEC) of withholding crucial information about a proposed crypto market structure bill, known as the CLARITY Act. This bill aims to establish a regulatory framework for the crypto industry in the United States and amend key sections of the country's foundational securities laws.

According to Democratic staffers on the House Financial Services Committee, the SEC has a standard practice of providing technical assistance, or "TA," to lawmakers when pending legislation could impact the agency's operations. This analysis is typically provided by non-partisan SEC experts to members of both parties, helping them understand the potential effects of such bills on the agency and financial markets. However, Democrats claim that the SEC has refused to share this analysis with them, despite providing it to Republicans.

The SEC spokesperson stated that the agency offers technical assistance to any Member of Congress who requests it, including on crypto-related bills. However, the spokesperson did not address the specific claims made by House Democrats that they were denied written technical assistance on the CLARITY Act.

Democrats are concerned about the SEC's lack of cooperation, given the significant impact the CLARITY Act could have on reshaping the agency's role in regulating financial markets. The bill is scheduled to be marked up in committee on June 10.

During a call with SEC staff, Democratic staffers reported that their questions about the potential effects of the bill beyond crypto, on traditional securities markets, were either unanswered or not fully addressed. This has led House Financial Services Committee Ranking Member Maxine Waters to plan a letter to SEC Chair Paul Atkins, requesting written analysis of the CLARITY Act’s potential impact.

Democrats are worried that the CLARITY Act could create loopholes for traditional finance players to exploit if they adopt blockchain technology. They believe that the SEC's input is crucial for understanding the bill's implications and making informed decisions before it sees a committee vote.

While all Republicans and a key group of pro-crypto Democrats on the House Financial Services Committee support the legislation, Democrats like Waters are unlikely to back the bill due to President Donald Trump’s involvement in personal crypto ventures. However, the lack of cooperation from the SEC could potentially impact support for the bill even among pro-crypto Democrats.

One Democratic staffer emphasized the importance of the SEC's feedback in understanding the bill's provisions, loopholes, and areas for improvement. Without this feedback, it is impossible for lawmakers to fully comprehend the bill's implications and make necessary adjustments.