The US Securities and Exchange Commission (SEC) has been at the forefront of a crackdown on the country’s crypto industry. Recent actions against Coinbase and Justin Sun over alleged securities law violations have curbed industry enthusiasm.

That has sparked concerns about a new “Operation Choke Point 2.0,” a reference to a previous campaign that targeted industries deemed undesirable by the government.

Oversight of the SEC’s actions by the US Congress has been minimal. That is set to change with SEC Chairman Gary Gensler’s upcoming testimony before the House Committee on Financial Services on April 18.

Committee Chairman Patrick McHenry has established a Digital Assets Subcommittee to address the regulatory gap in handling crypto issues and has expressed a desire to give Gensler more congressional oversight.

Republican representatives French Hill and Warren Davidson, both supportive of crypto, lead the subcommittee. Davidson has been critical of Gensler and called for his removal. 

The hearing is expected to clarify Gensler’s rulemaking and approach to crypto assets, and McHenry has promised further regulatory hearings throughout the summer.

The law firm Cooper & Kirk has published an analysis highlighting how banking regulators are using the same tactics against the crypto industry in 2023 as they did during Operation Choke Point 1.0 in 2014. 

That has raised concerns among the crypto community and reinforces the need for congressional oversight.

As the crypto industry evolves, regulatory bodies must strike a balance between protecting investors and fostering innovation. 

The upcoming congressional hearing presents an opportunity for the SEC to provide clarity on its actions and for Congress to ensure that the industry is not unfairly targeted.

Moreover, it marks a curious precedent. The Securities and Exchange Commission has never been the subject of an oversight hearing. Many skeletons will likely come out of the closet, especially regarding cryptocurrency. 

However, that doesn’t mean the regulatory landscape will change favorably either. 

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