The House Financial Services Committee listened to Securities and Exchange Commission (SEC) Chairman Gary Gensler’s testimony on Tuesday about the agency’s recent enforcement actions against the crypto industry. Gensler was questioned about how he distinguishes between crypto securities and crypto commodities as well as the issues that crypto firms face in accessing financial services.
Clearer Guidelines Needed
Committee chair Patrick McHenry noted that Gensler and the exchange commission had initiated “nearly 50 separate enforcement actions against digital asset firms” in his opening statement. The agency is requesting $78 million in funding to expand its enforcement.
“At the same time, you have refused to provide clarity on whether digital assets offered as part of an investment contract are subject to securities laws, and more importantly, how these firms should comply with those laws,” McHenry said.
In his previous statements and interviews, Gensler has claimed that most crypto assets are securities; however, he has only explicitly named Bitcoin as a commodity. He has refused to mention other crypto names, including Ethereum’s classification.
During Tuesday’s hearing, Gensler avoided a direct answer about whether Ether was a commodity or security. He only stated that “the clarity is there, the law is clear and explicit.” Gensler frequently relies on the Howey Test when determining whether a digital asset is a security or not.
Enforcement over Regulation
Minnesota Rep Tom Emmer questioned Gensler about the hostile regulatory and banking environment that crypto firms are facing in the United States. Emmer criticized Gensler for making it more challenging for crypto firms to operate in the country.
“Your regulatory style lacks flexibility and nuance, and as a result, you’ve been an incompetent cop on the beat,” said Emmer, “doing nothing to protect everyday Americans, and pushing American firms into the hands of the CCP.”
Emmer blamed Gensler for Terra and FTX’s multi-billion dollar collapse and suggested that FTX was given “special treatment” by the SEC last year.