The Securities and Exchange Commission (SEC) is not set up to handle the digital assets world said Rep. Patrick McHenry (R, NC) at a Punchbowl News event in DC today.
“I fundamentally think that the Securities Exchange Commission and the CFTC lack that capacity to well-regulate this new innovation,” McHenry told interviewer Anna Palmer. “I think you have to have a separate regulatory sphere for digital assets… that is neither the SEC nor the CFTC.”
Welcome to the Digital Assets Trading Commission (DATC)? Digital Assets Exchange Commission (DAEC)?
As it relates to stablecoins, specifically, and regulatory infrastructure, McHenry said that existing regulators could handle it. Moreover, he seemed mildly optimistic about recent stablecoin proposals by the Biden administration as it related to his party’s emerging proposals (such as here and here).
On the accredited investor provision which requires private investors to have at least $1 million in net worth among other requirements, McHenry was unequivocal: “If you’re born on the wrong side of the tracks without connections, this is a severe limiter to start up a business. The accredited investor standard takes out people that are highly informed or connected in a way that doesn’t fit neatly with securities law. We have to update the standard and it has to be in keeping with the current market needs and the current disclosure needs. Investors are smarter today than they’ve ever been before.”
He added that the meme stock revolution last year indicated smaller investors are aware of the risks and want upside potential. But, McHenry pointedly added, “What we’re trying to solve for is the creation of new small businesses” – presumably by investors with under $1 million in net worth.