“No Cop on Crypto?” US Hearing Exposes SEC Rollbacks, 2026 Reform Push

Key Takeaways:

• U.S. lawmakers warned crypto oversight may be weakening as enforcement actions decline at the U.S. Securities and Exchange Commission. 
• There was a hearing of the congress on whether regulators could stay abreast with the rapid markets in digital assets. 
• A proposed bill of 2026 will establish new compliance avenues and innovation offices to crypto companies. 

A congressional hearing in the U.S. has sparked renewed crypto regulation controversy with policymakers doubting that existing regulation could keep up with the pace of innovation of digital assets.

Congress Reviews Crypto Oversight Gaps

The Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence of the House Financial Services Committee hosted a hearing on a new regulation method of crypto adaptation by regulators.

The Federal Reserve, FDIC, OCC, and NCUA officials testified that they have the capability to oversee emerging technologies. Policy-makers pressured them on the question of the effectiveness of current structures, in place as the crypto markets rapidly developed.

Another aspect examined in the session was whether the agencies possess sufficient knowledge and capabilities to address new risks associated with digital properties.

Read More: SEC Drops Bombshell: Most Crypto Not Securities as $75M Safe Harbor Emerges

Lawmakers Raise Alarm Over Enforcement

“No cop on the beat”

The recent regulatory changes have come under severe criticism especially by Representative Stephen Lynch who claims that there is a loosening of the reins. He indicated that there were a number of developments:

• The stopping of teams in charge of solving fraud and scams relating to crypto
• The closure of Finhub – a unit specialized in fintech and digital asset
• The reduction in resolution measures adoption on crypto firms facing misconduct charges 

Lynch cautioned that such changes would expose investors to vulnerability particularly where such market is depicted to be volatile and subject to frauds. He further mentioned that there is a reduction in the number of staff members in consumer protection institutions, raising issues with the general fiscal regulation associated with crypto products.

Regulators Point to Coordination Efforts

Momentum was stopped by inter-agency coordination set forward by the regulators. The government representatives have announced the existence of several authorities that are now tasked with the role of overseeing risks in financial markets, including crypto.

They observed that there are current attempts to harmonize the management style of supervision and refresh guidance where necessary. Nonetheless, legislators doubted the effectiveness of such a coordination as the absence of well-defined legal frameworks. The absence of a common crypto book is one of the key issues.

Read More: XRP Jumps to $1.43 as SEC Clarity and $1B Evernorth IPO Ignite Demand Surge

2026 Bill Targets Innovation Framework

The hearing also reviewed the proposed Financial Services Innovation Act of 2026.

The bill would require federal regulators to establish Financial Services Innovation Offices. These offices would allow companies, including crypto firms, to apply for tailored compliance agreements.

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