French HillChairman

Washington, March 7, 2025 -

Today, House Financial Services Committee Chairman French Hill (AR-02),  Chairman of the Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence Bryan Steil (WI-01), and Chairman of the Subcommittee on Capital Markets Ann Wagner (MO-02), sent a letter to Acting Chairman of the U.S. Securities and Exchange Commission (SEC), Mark Uyeda, encouraging the Commission to take additional steps to remove inappropriate hurdles put in by place by the Biden Administration that hinder the digital asset ecosystem.

In the letter, Hill, Steil, and Wagner stated, “Over the previous four years, the U.S. Securities and Exchange Commission (SEC) has established itself as one of the primary impediments to the development of digital assets. With your leadership and President Trump’s nomination of Paul Atkins to be the next Chair of the Commission, there is renewed hope that the SEC will turn a corner on its outwardly hostile stance toward the digital asset ecosystem. We are pleased that both you and Commissioner Peirce have led the SEC to take important steps toward turning this hope into a reality. We write today to encourage the Commission to take additional steps to remove the inappropriate hurdles put in place by the Biden Administration.”

Read the full letter here or below.

Dear Acting Chair Uyeda:

Over the previous four years, the U.S. Securities and Exchange Commission (SEC) has established itself as one of the primary impediments to the development of digital assets. With your leadership and President Trump’s nomination of Paul Atkins to be the next Chair of the Commission, there is renewed hope that the SEC will turn a corner on its outwardly hostile stance toward the digital asset ecosystem. We are pleased that both you and Commissioner Peirce have led the SEC to take important steps toward turning this hope into a reality. We write today to encourage the Commission to take additional steps to remove the inappropriate hurdles put in place by the Biden Administration.  

Over the course of just a few weeks, the SEC rescinded SAB 121, formed the SEC’s Crypto Task Force, and withdrew its appeal of a federal judge’s decision to vacate the Commission’s final rule expanding which entities it considers “a dealer.” Although the SEC has sent a clear message that it is adopting a different posture towards digital assets, there is more work to be done. As a first step, the SEC should abandon several proposed rules issued by the Biden Administration.

On February 15, 2023, the SEC proposed “Safeguarding Advisory Client Assets,” which required that investment advisers with custody of digital assets maintain those assets with a “qualified custodian” while simultaneously casting doubt on the investment adviser’s ability to meet this requirement. In light of your characterization of this proposal as a “‘no-win’ scenario for crypto assets” and Commissioner Peirce’s assertion that the proposal “could leave investors in crypto assets more vulnerable to theft or fraud, not less,” we urge the SEC to cast this proposal aside and start fresh with any efforts to provide clarity regarding custody requirements for digital assets. In contrast to the Commission’s approach on SAB 121, we request the SEC coordinate your new approach with the prudential regulators. 

Additionally, on January 26, 2022, the SEC proposed “Amendments Regarding the Definition of ‘Exchange’ and Alternative Trading Systems (ATSs) That Trade U.S. Treasury and Agency Securities, National Market System (NMS) Stocks, and Other Securities.” Over a year later, the SEC reopened the proposal’s comment period and included supplemental information around its applicability to the digital asset ecosystem. Committee Republicans have consistently opposed this proposal, rejecting its attempt to shoehorn the digital asset ecosystem into rules for securities exchanges. This proposal threatens to subject decentralized finance protocols, and potentially even software developers, to the onerous regulations applicable to securities exchanges, without a legitimate pathway to compliance. As the title of Commissioner Peirce’s dissent to this rulemaking suggests, this proposal would have disastrous implications for the digital asset ecosystem and ultimately render “innovation kaput.” Moreover, as Commissioner Peirce explained, under this rulemaking, the SEC “stretch[es] the statutory definition of ‘exchange’ beyond a reasonable reading to reach a poorly defined set of activities with no evidence that investors will benefit.” No longer must the SEC adhere to former Chair Gensler’s personal biases against the digital asset ecosystem. This proposal must also be withdrawn.  

Finally, the SEC, as it works to answer many of the questions the Commission’s Crypto Task Force is grappling with, should update the 2019 “Framework for Investment Contract Analysis of Digital Assets.” While the framework identifies several distinct factors and additional sub-factors that should be considered under the Howey test as it applies to digital assets, it fails to outline how the factors should be weighed, or the combination of factors that result in a digital asset being subject to securities laws. In a statement, Commissioner Peirce posed several questions that the Task Force is examining related to the security status of digital assets. As Commissioner Peirce and the Task Force work to find answers to these questions, we are confident the SEC will have the necessary clarity to update this guidance and account for any ambiguity or uncertainty when determining whether a digital asset qualifies as a security.