Elizabeth Warren and Chris Van Hollen have warned that new crypto guidance from the US Securities and Exchange Commission could undermine investor protections across large parts of the market.
The senators raised concerns over a proposed framework that classifies crypto assets into categories such as digital commodities, collectibles, tools, stablecoins and securities, with several groups falling outside securities laws.
“It appears that you plan to work towards this goal by exempting most cryptocurrencies from the securities laws—with significant potential harm to and implications for investors and our financial markets,”
The senators wrote.
The letter argues that activities like mining, staking, wrapping and airdrops could be largely excluded from regulation, potentially reducing oversight of how crypto assets are distributed and traded.
It also challenges the idea that crypto assets can be separated from investment contracts, warning that assets could move in and out of regulatory coverage, and following the announcement there was no immediate market reaction.
The senators flagged potential new exemptions for startups and fundraising, which could allow crypto firms to raise significant capital without full SEC registration requirements.
The warning comes as SEC Chair Paul Atkins faces a May 8 deadline to respond, with Congress continuing to debate broader crypto market structure legislation.