House GOP urges SEC to withdraw rule that could impact decentralized exchanges.

House Republicans have called for the withdrawal of a proposed rule by the Securities and Exchange Commission. The proposed rule would shut down the development of the digital asset industry, according to the lawmakers. A group of lawmakers from the House Financial Services Committee wrote to the SEC criticizing the proposed rule that they say could expand the definition of an exchange to include “communication protocol systems” and could go beyond centralized exchanges. The lawmakers argued that the rule could capture software developers and those in a blockchain network’s consensus mechanism. Almost 30 lawmakers signed the letter including House Financial Services Chair Patrick T. McHenry, French Hill, Tom Emmer and Warren Davidson.

SEC Gensler’s personal views

The lawmakers also accused SEC Chair Gary Gensler of “using this proposal to push his own personal views regarding digital assets.” They cited his previous statements claiming that DeFi exchanges are essentially equivalent to traditional intermediaries in financial markets even if they call themselves something different. The lawmakers also accused the SEC of “attempting to front-run Congress” when they themselves with the House Agriculture Committee are working on legislation to regulate digital assets.

Leaders in both the House Financial Services Committee and the House Agriculture Committee have released draft legislation to regulate crypto including measures that would “classify cryptocurrencies as a security or a commodity and regulate exchanges, among other measures.” McHenry said during a hearing on Tuesday that he wants to hold a vote on that bill by mid-July. “This is a draft bill,” he said during that hearing. “There’s plenty of time for us members to find common ground on how we legislate here, but be advised I intend for this committee to markup some form of this legislation when we return from the July 4 recess.”