Gary Gensler, chairman of the United States Securities and Exchange Commission (SEC), recently appeared before the Committee on Financial Services of the United States House of Representatives for a hearing on his leadership of the regulatory agency.
The hearing, with Gensler as the sole witness, That promised to be unpleasant for the SEC chairman, as from spring 2021 onwards the actions of the federal agency under Gensler’s leadership will come under scrutiny.
Since the introduction of committee chairman Representative Patrick McHenry, Gensler has come under fire for the SEC’s perceived overreach and approach to regulation through coercion.
McHenry said that the absence of a clear position on the legal classification of cryptocurrencies makes it difficult for companies to comply with the SEC’s demands.
the day before the hearing, Representative Warren Davidson announced a measure to “correct a long series of abuses” against the crypto industry by sacking the SEC chief and curtailing the power of his successors.
As alarming as it may sound, this was not the first attack on Gensler, and it probably won’t be the last. The SEC chairman has made many enemies not only in the crypto sphere during his two years in office.
But exaggeration and congressional grace aside, was it all that bad for the SEC chairman on April 18th, and could he be softening his position on crypto?
applause and cheers
McHenry’s fiery keynote was inspired by the SEC’s impressive record of 50 enforcement actions against digital asset companies and the agency’s request for an additional $78 million to expand its operations.
McHenry blamed Gensler for being “crazy” for punishing crypto companies for failing to comply with the law with “not enough, not sustainable” regulation by law enforcement and rulemaking. “very aggressive”
In his prepared testimony, Gensler rebuked the hasty rulemaking, citing standard procedures (the comment period for SEC proposals currently averages more than 70 days) and the need to meet the urgent challenges of the time. Dismissed, among which digitization is the main one. ,
Speaking of cryptocurrencies Gensler reaffirmed his stance that “most cryptocurrencies are securities” and should be regulated by the SEC., In his opinion, the market is “rife with lapses” and, in the name of investor protection, should be regulated according to the same rules as apply to traditional finance:
“It’s the law; it’s not a choice. Calling yourself a DeFi platform [finanzas descentralizadas]For example, it is not an excuse to challenge the securities laws.”
Rep. Tom Emmer asked whether Gensler was concerned that such an approach could lead to an exodus of US crypto companies, but did not give the SEC chief time to respond.
Representative Barry Loudermilk was a bit more creative. He asked Gensler whether he believes that a government agency’s centralized access to information for private investors is more secure than the decentralized cryptocurrency market. In reply, Gensler defended the need for a consolidated auditing system to “help monitor the market”.
Those who thought they were going to “destroy” Gensler were probably disappointed by the support they received during the hearings. At the start of the meeting, he received words of thanks from Representatives Maxine Waters and Brad Sherman, who praised the SEC’s fight against “crypto billionaires.” Representative Stephen Lynch humorously asked to specify whether the amount of written guidance from the commission doesn’t sound like clarity to the crypto industry.
It was New York Democratic Rep. Richie Torres who announced that instead of focusing more on “offshore, underregulated and overleveraged” companies like FTX or Binance, the SEC is targeting onshore and regulated exchanges like Coinbase.
On my way to testify before the @FinancialCmte at the Rayburn House office building, I passed the statue of Sam Rayburn.
Mr. Sam worked with FDR to establish our first federal securities laws.
We are excited to bear witness to the important work we do to bring your vision to life.
Torres also mentioned the SEC’s interest in stablecoin issuer Paxos, but not Tether. Gensler replied that cases involving foreign companies take longer to conduct a proper investigation.
Representative Davidson, whose intention to fire Gensler through legislation was made public ahead of the hearing, barraged the SEC chairman with a request to clarify whether he would like to hear from Ether (ETH) and XRP (XRP) securities. Considers. Notably, however, Davidson didn’t give Gensler much time to come up with a clear answer, proceeding to read through a long list of purported SEC decisions.
Representative Mike Flood pressed Gensler for comment on the SEC issuing Staff Accounting Bulletin 121 (SAB 121) without consulting any banking regulator., Issued in March 2022, SAB 121 requires cryptocurrency platforms to include digital assets as liabilities on their balance sheets at fair value. Reluctant at first, Gensler acknowledged that the agency did not consult with banking regulators, but noted that the SEC consulted the Big Four accounting firms instead.
Last but not least, representative Erin Houchin spoke out, citing the European Crypto Asset Markets Act (MiCA) as an example of a global framework for the digital industry, which she believes will have its place in the United States. There is a shortage. In response, Gensler assured him that the country enjoys a clear regulatory framework built over 90 years.
conclusion
The hearing was not devoted exclusively to the SEC’s strategies on cryptocurrency. Indeed, the regulator’s climate disclosure standard for publicly traded companies received the most attention from lawmakers, despite the topic’s strong presence in the keynote speech.
The cryptocurrency industry hasn’t heard much from Gensler, who was on the one hand reluctant to go into details and on the other has faced more token pressure than any real attempt at questioning.
“It is highly unlikely that any of the questions put forward or arguments raised have done much
Ada, to influence the SEC’s current regulatory approach to the crypto-asset industry,” Jackson Mueller, the SEC’s director of policy and government relations, told Cointelegraph.
“SEC and Gensler Haven’t Confirmed ETH Was a Commodity or Security”Ian Weisberger, CTO and co-founder of Coinroots, told Cointelegraph. However, in his opinion, Gensler assures that the existing legislation is sufficient to regulate cryptocurrencies:
“The SEC’s position is that cryptocurrency companies must be registered under existing securities laws that were written in the 1930s. These laws are designed for centralized companies and have disclosure requirements that do not work for the unique structure of companies. crypto network”.
Another important aspect was the partisan divide surrounding cryptocurrencies. All but one of the delegates who questioned Gensler about the digital asset were Republicans. maybe it’s not surprising Given Republican opposition to the Biden administration appointment; However, it highlights how crypto-law is not immune to partisan political divisions.
The contours of this divide are even more striking when looking at cryptocurrency advocates, be it Republican Sen. Cynthia Lummis at the federal level or State Sen. Wendy Rogers of Arizona. The same goes for critics, especially Democratic Sens. Elizabeth Warren and Sherrod Brown.
Is there a possibility that the SEC will soften its stand under the current presidency? Coinroot’s Weisberger believes the agency is relying on authentic regulators like Hester Pierce. pierce, Also known as “Crypto Mom”, she has repeatedly raised concerns about regulations regarding trading platforms that do not handle tokens that qualify as securities or how to approach traders that do not handle securities that are non-securities. Switch to securities trading., In Weisberger’s view, the best hope remains for Congress to pass some sort of legislative framework above the SEC level.
the explanation: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be construed as financial advice or investment recommendation. All investments and commercial dealings involve risk and it is the responsibility of each individual to conduct appropriate research before making any investment decision.
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