SEC Chair Gary Gensler testified before the House of Representatives, facing sharp criticism from members of Congress. The Block reports The Block.
The politicians questioned the official about the SEC’s policy on digital assets and clarified timelines for approving Bitcoin-ETF.
Chairman Patrick McHenry began by asking whether Bitcoin is a security. The chair replied that the first cryptocurrency is not considered one, as it does not meet the Howey test.
Earlier, Gensler stated that all digital assets, except Bitcoin, could be classified as securities.
McHenry also threatened the official with a subpoena for his ‘lack of transparency’ before other agencies and alleged ties to a collapsed FTX and its former CEO Sam Bankman-Fried.
“Either we find a way forward in which the SEC recognises Congress as an equal branch of government and begins to respond to our remarks, or my only option is to file a lawsuit,” the member of the House of Representatives stressed.
Republican Tom Emmer criticized Gary Gensler for his ‘derisive’ approach to regulating the cryptocurrency industry. In his view, the agency prefers to consolidate power in its own hands rather than think about ordinary Americans and the country’s future.
The SEC chair again reiterated his position that the majority of digital assets and crypto firms fall under federal securities laws. He also added that the industry generally does not meet the requirements and is rife with conflicts.
Representative Richie Torres asked Gensler whether buying Pokémon trading cards could constitute a secured transaction and, therefore, fall under securities laws. Gensler replied in the negative.
Then Torres asked how a similar deal conducted on a blockchain would be classified. The chair paused to consider and asked for more input data.
Congressional members also remained dissatisfied with the delay in approving a spot Bitcoin ETF. Ahead of the hearings, the SEC postponed decisions on exchange-traded funds based on the first cryptocurrency and Ethereum.
Earlier this August, Representative Warren Davidson urged the removal of Gensler from the agency’s top post over the regulator’s mishandling of the Grayscale case. He was preceded by a partial defeat of the regulator in the Ripple case.
Later, media accused the SEC chair of turning the agency into a “banana republic.”