Congress Moves to Overhaul Securities Laws Targeting SEC Overreach and Unleashing Crypto Innovation

U.S. lawmakers gathered in Washington on April 9 as the Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence convened its first market structure hearing of the 2025 congressional session.

In a pivotal move to overhaul U.S. securities laws and foster a new era of American crypto innovation, Congress is taking aim at SEC overreach.

In a pivotal move to overhaul U.S. securities laws and foster a new era of American crypto innovation, Congress is taking aim at SEC overreach.

The House Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence convened its first market structure hearing of the 2025 congressional session on April 9.

The House Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence convened its first market structure hearing of the 2025 congressional session on April 9.

The session, titled "American Innovation and the Future of Digital Assets: Aligning the U.S. Securities Laws for the Digital Age," explored how current regulatory ambiguities impact both innovation and investor protection in the digital asset space. Testimony from lawmakers and legal experts converged on a pressing need for Congress to intervene in defining digital asset laws.

"Last week, this Committee took an important step toward delivering real legislative certainty for payment stablecoins by advancing the STABLE Act," said Rep. French Hill (R-Ark.), chairman of the House Financial Services Committee. "It is incumbent on us to build on that momentum and continue working toward a comprehensive regulatory framework that establishes clear rules of the road for digital asset markets."

Highlighting the urgency of congressional action, Subcommittee Chair Bryan Steil (R-Wis.) added: "It is crucial for this Committee to enact legislation that provides clear guidelines for issuers and market participants, facilitates capital formation, and maintains the integrity of both the digital asset ecosystem and the traditional financial system.

Highlighting the urgency of congressional action, Subcommittee Chair Bryan Steil (R-Wis.) added: "It is crucial for this Committee to enact legislation that provides clear guidelines for issuers and market participants, facilitates capital formation, and maintains the integrity of both the digital asset ecosystem and the traditional financial system.

"Through this process, we must ensure that American innovators and entrepreneurs can thrive here at home."

Among the legal witnesses, Rodrigo Seira of Cooley LLP highlighted the pressing need for Congress to define digital asset laws to replace SEC-led regulation.

Among the legal witnesses, Rodrigo Seira of Cooley LLP highlighted the pressing need for Congress to define digital asset laws to replace SEC-led regulation.

"Regulation, technological development, and the flows of financial capital are tightly intertwined and interact in a recurring pattern throughout history," said Seira. "We are living through that moment: it is clear that the current securities regulatory framework is not a viable option to regulate crypto and fails to achieve its stated policy goals."

Pointing to the SEC’s limited progress in an area demanding urgency, Tiffany J. Smith from WilmerHale urged legislative clarity.

Pointing to the SEC’s limited progress in an area demanding urgency, Tiffany J. Smith from WilmerHale urged legislative clarity.

While recognizing the SEC’s efforts, Smith stated that the agency “has taken steps within its jurisdiction to provide regulatory clarity, these actions alone are not sufficient. I believe that action by Congress is necessary to have true regulatory clarity for the digital assets industry.”

Highlighting the broader implications of U.S. inaction, Polygon’s Chief Legal Officer Jake Werrett noted, "What began as a monetary innovation has become a foundation for decentralizing all forms of native digital assets and new programming paradigms like Web3. We cannot afford to be left behind, or to push valuable innovation offshore."

Meanwhile, lawmakers also sounded the alarm on the potential of the current SEC leadership to hamper the U.S. in seizing a leadership role in the new era of digital assets.

Meanwhile, lawmakers also sounded the alarm on the potential of the current SEC leadership to hamper the U.S. in seizing a leadership role in the new era of digital assets.

"The SEC under former Chairman Gary Gensler pursued an aggressive enforcement regulatory agenda that sought to extend the SEC’s authority over the entirety of the digital asset ecosystem in the absence of clear congressional mandate," said Rep. Troy Downing (R-Mont.). "Treating every digital asset as a security regardless of its purpose risks the United States forfeiting its leadership in financial technology."