SEC Chair Gary Gensler, alongside all five commissioners, faced intense questioning during a congressional hearing where the agency was criticized for its aggressive regulatory approach to cryptocurrencies. This marked the SEC's first full testimony since 2019.
Lawmakers expressed concerns over Gensler’s enforcement-heavy strategy, arguing it has created uncertainty in the growing crypto sector. Gensler frequently claims that most cryptocurrencies qualify as securities, a stance that has drawn scrutiny, particularly regarding the SEC's ambiguous terminology on digital assets like Ethereum.
SEC Criticized on All Fronts
Commissioner Hester Peirce criticized the SEC for failing to provide regulatory clarity despite having the necessary tools. She noted that vague terms suggesting crypto tokens are inherently securities have complicated market oversight.
Representative French Hill supported Peirce, condemning the SEC for "frontrunning Congress" on crypto regulation and emphasizing the need for clearer statutory guidelines. He and Peirce highlighted the importance of legislative support, especially as the SEC has avoided formal rulemaking.
Rep. Tom Emmer specifically called out Gensler for coining terms like "crypto asset security," which the SEC has now pledged to avoid in future legal contexts.
The hearing, titled “Oversight of the Securities and Exchange Commission,” followed a previous meeting where Gensler faced similar criticisms. Dan Gallagher, a former SEC commissioner, underscored the necessity for congressional intervention to clarify regulatory frameworks.
Looking Ahead: Republican lawmakers demanded that various financial regulatory agencies revoke Staff Accounting Bulletin 121, which they argue has not been officially sanctioned by the SEC. This has raised concerns among crypto industry participants about potential unfair practices in the digital asset custody market. Gensler is also scheduled to testify again before the Senate Banking Committee, although that meeting has been postponed.
