- U.S. Lawmakers grilled SEC Chair Gary Gensler over his approach to crypto regulation.
- House Financial Services Committee Chair threatened to subpoena SEC chair over lack of transparency in crypto regulation cases.
In a House Financial Services Committee hearing on Wednesday, U.S. lawmakers criticized Gary Gensler’s approach toward digital assets.
The heated exchange between several lawmakers and Gensler highlighted the growing frustrations of the lawmakers on the Securities and Exchanges Commission’s aggressive crypto crackdown.
In his speech, he reminded the U.S. lawmakers of the SEC’s contributions to America’s economic success in various sectors. Speaking on crypto, he criticized the industry’s lack of compliance with regulations, citing FTX’s downfall as a reminder of the need for regulatory oversight. Reiterating the SEC’s position on crypto, The SEC Chair emphasized Howey’s test as a determinant of what serves as a security in the crypto industry.
According to him, the recent crypto regulatory crackdown by the SEC is simply an effort directed at protecting investors by enforcing regulations on securities.
“There is nothing about the crypto asset securities markets that suggests that investors and issuers are less deserving of the protections of our securities laws,” He stated in his testimony.
U.S. Lawmakers Criticize Gensler, Threatens To Issue Subpoena
During the hearing, U.S. lawmakers asked the Chief of the Securities and Exchange Commission to clarify whether Bitcoin was a security. The discourse on whether Bitcoin qualifies as a security is significant to the crypto space. Before the hearing, Gensler once said everything besides Bitcoin could be a security. The need for clarification is expected at a time when the industry is yet to attain clarity on what constitutes security.
Unexpectedly, Gensler was evasive in his response, but the House Financial Services Committee Chair, Patrick McHenry, was insistent. Eventually, the SEC chair responded that Bitcoin does not qualify as a security, according to the Howey Test.
The U.S. lawmakers expressed their frustrations with Gensler’s approach to crypto regulations. The Committee Republicans accused the SEC chief of taking a “regulation by harassment” approach towards the crypto industry. The House Chair also accused him of denying Congress’ requests for details of his interaction with FTX and the collapsed platform’s former CEO, Sam Bankman-Fried. Patrick McHenry, the Committee’s Chair, threatened Gensler with a subpoena.
“Either we find a path forward where the SEC recognizes Congress as a co-equal branch of government and is responsive to our oversight duties, or my only option is to issue a subpoena,” McHenry stated at the hearing.
Throughout the hearing, Gary Gensler gave evasive answers on significant issues that require clarity. The SEC is yet to approve Bitcoin-ETFs despite Congress’ push for its approval. Although Genser stated that Bitcoin is not a security, the approval for Bitcoin-ETF rests in its domain, a contradictory phenomenon, as non-security assets are outside the SEC’s jurisdiction.
While most U.S. lawmakers grilled the SEC Chair hard and vented their frustration with his regulatory approach, a Democrat, Maxine Waters, supported Gensler’s position.