The “Mr. Burns of crypto,” SEC Chair Gary Gensler, found himself at the centre of heated exchanges with lawmakers from both major parties on Tuesday, as frustrations mount over the agency’s stance on cryptocurrencies. Critics argue that the SEC’s policies are stifling growth within the industry, and the political pressure is intensifying with the upcoming election year and increased campaign contributions from crypto advocates.
The U.S. House Financial Services Committee hearing saw all five SEC commissioners present allowing dissenting Republican voices to join their Democratic counterparts in expressing dissatisfaction with Gensler’s leadership.
Committee Chairman Patrick McHenry, a Republican, pointed out that the SEC’s inconsistent terminology regarding digital assets has left the industry in a state of confusion about which assets fall under the agency’s jurisdiction. In response, Gensler argued that the issue is less about terminology and more about economic substance, referencing Supreme Court rulings on the definition of securities as investment contracts.
However, Commissioner Hester Peirce, known for her critical stance on Gensler’s approach, accused the SEC of adopting a “legally imprecise view” that obscures regulatory clarity. This lack of clarity, she argued, has made it difficult for the industry to ascertain whether an asset qualifies as a security or falls under different categories.
Despite calls for tailored regulations for the crypto sector, Gensler has maintained that current securities laws are adequate for overseeing the industry. He defended a controversial 2022 SEC accounting bulletin that mandates public companies holding crypto assets to report them as liabilities on their balance sheets. Gensler stated that recent bankruptcies within the sector validated this accounting practice, further justifying the SEC’s approach.
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