- SEC Chair Gensler was grilled by Republican lawmakers for his handling of the crypto market.
- The lack of clarity on which cryptocurrencies are considered securities remains a major issue.
- Some Republicans accused Gensler of being incompetent and failing to protect investors, with Rep. Warren Davidson introducing legislation to remove him as SEC Chair.
Securities and Exchange Commission (SEC) Chair Gary Gensler faced tough questioning from Republican lawmakers during a recent oversight hearing of the SEC. Republicans have accused Gensler of overstepping his bounds and failing to effectively regulate the crypto market, which Gensler has defended, arguing that the industry is rife with securities law violations.
During the hearing, Rep. Patrick McHenry, who chairs the House Financial Services Committee, challenged Gensler’s approach, arguing that many crypto firms don’t know which laws apply to them and that the SEC’s enforcement efforts have been “nonsensical.”
Gensler responded by insisting that the law is clear but that many crypto firms simply don’t want to comply. He pointed out, “I’ve never seen a field that is so non-compliant with laws written by Congress.”
The SEC Chair’s focus on regulating the trading platforms of unregistered securities has drawn criticism from the crypto industry, which argues that it’s unclear how these laws apply to cryptocurrencies. The industry is particularly frustrated with the SEC’s lack of clarity on which cryptocurrencies are considered securities.
During the hearing, McHenry raised the question of whether Ethereum ($ETH) is a commodity or a security, which Gensler tried to answer indirectly. The SEC chair instead claimed that if the public anticipates profits from an asset based on the efforts of a group of individuals, then those assets were security. This lack of clarity has been a major point of contention between the SEC and the crypto industry.
Meanwhile, other Republican lawmakers have taken a harder line against Gensler, accusing him of failing to protect investors and allowing fraud to occur under his watch. Rep. Tom Emmer referred to Gensler as an “incompetent cop on the beat” for failing to stop fraud in the crypto industry.
Rep. Warren Davidson went even further, introducing legislation to remove Gensler from his position as SEC Chair. Davidson criticized Gensler for his overreach and argued that the SEC needs to be restructured.
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