In an unprecedented move, the House Financial Services Committee and House Agriculture Committee came together to discuss the best legislative approach to digital assets. However, the meeting started with one of the top Democrats, Rep. Stephen Lynch (D-Mass.), questioning whether it’s necessary to create a separate regulatory regime for cryptocurrencies. The joint hearing was called urgently in response to the lack of government oversight in the crypto industry, which is currently experiencing a period of turmoil. The group included the Republican chairs, ranking Democrats, and subcommittees working on digital assets. Rep. Lynch threw cold water on the idea of legislation, stating that it could be viewed as a “light touch” and encourage other sectors to move their financial products into the digital-assets space. He argued that the SEC has ample authority to regulate the industry under existing securities laws and that creating a separate regulatory regime through legislation is not the answer. The House Financial Services Committee Chair, Patrick McHenry (R-N.C.), emphasized the need to “make law” during his brief opening remarks. Meanwhile, his Democratic counterpart, Rep. Maxine Waters (D-Calif.), talked about the urgency to “develop legislation together.” Rep. Lynch’s rhetoric aligned with that of Securities and Exchange Commission (SEC) Chair Gary Gensler, who argues that the crypto industry should follow existing securities laws. Rep. Lynch stated that the majority of the crypto industry has failed to protect investors and is ignoring a longstanding legal framework. Democrats Split on Crypto Regulation The discord among the Democrats regarding crypto regulation highlights the ongoing debate in Congress about how to best address the fast-growing industry. Some Democrats argue that regulations are necessary to protect investors and prevent fraud, while others believe that existing laws are sufficient. The SEC has already made significant efforts to regulate the crypto industry, pursuing enforcement actions against companies that violate securities laws. However, the lack of clarity regarding the classification of cryptocurrencies under securities laws has made it difficult for companies to comply with regulations. Moving Forward The joint hearing was just the beginning of what is likely to be a long and ongoing debate about crypto regulation in Congress. The industry is evolving rapidly, and lawmakers will need to keep up with the changing landscape to ensure that investors are protected and fraud is prevented. In the meantime, the SEC will continue to use its existing authority to regulate the industry, while Congress works to develop new legislation that can address the unique challenges presented by digital assets.