What criticisms did Gensler face during his testimony before the House Financial Services Committee?
- Lawmakers criticized Gensler, accusing the SEC of “selective enforcement” and rogue behavior. Gensler defended SEC’s stance, citing non-compliance in the cryptocurrency sector.
The crypto sector’s long-anticipated event arrived as SEC Chair Gary Gensler faced intense scrutiny during his testimony before the House Financial Services Committee on the 24th of September.
Accusations against Gensler
Lawmakers openly criticized SEC Chair Gary Gensler during the hearing, with Rep. Pete Sessions accusing the SEC of “selective enforcement.”
Rep. Patrick McHenry asserted that Gensler transformed the SEC into “a rogue agency.”
Meanwhile, Rep. Tom Emmer bluntly claimed that Gensler “abused” the agency’s enforcement tools.
This session underscored the escalating tensions between regulators and the crypto industry, raising questions about the future of regulatory oversight.
That being said, Emmer confronted Gensler directly, and stated,
“Your inconsistencies on this issue have set this country back. We could not have had a more historically destructive or lawless chairman of the SEC.”
Gensler defends himself and the SEC
Responding to which Gensler added,
“I think that there’s laws in place. If Congress wishes to change them, they will change them, but we are enforcing the law, and there are many people in this field who are not following the laws.”
Gensler staunchly defended the SEC’s “regulation by enforcement” strategy.
He asserted that numerous players within the cryptocurrency sector fail to comply with existing securities laws.
However, he faced criticism from within the agency.
For instance, SEC Commissioner Hester Peirce stated that the SEC should have withdrawn the term “crypto asset security” in court “a long time ago.”
Peirce added,
“We’ve fallen on our duty as a regulator not to be precise.”
Major cases highlighted
During the 5-hour long session, Gensler also faced significant backlash over the Debt Box case, where the SEC alleged a $50 million fraud.
For those unaware, the case was dismissed on the 28th of May, and the SEC was ordered to pay $1.8 million in fees.
Additionally, representative Emmer accused SEC attorneys of crafting lies to support Gensler’s “anti-crypto rhetoric” and enforcement strategy, amplifying concerns about the SEC’s regulatory practices.
To which Gensler replied,
“The matters in that case were not well handled.”
Despite pressure from 42 U.S. politicians to repeal Staff Accounting Bulletin No. 121, or SAB 121, Gary Gensler remained firm.
When pressed by Representative Wiley Nickel, Gensler stated that the rule would continue to be enforced.
“No, it’s a good accounting bulletin.”
This stance drew significant criticism and underscored the contentious relationship between the SEC and lawmakers concerned about its impact on the cryptocurrency industry.
What’s next for Gensler?
Amidst the criticism, Rep. Brad Sherman (D-CA32), known as one of the staunchest anti-Bitcoin voices on Capitol Hill, was the sole lawmaker to support Gensler.
He thanked the SEC for standing up for crypto and added,
“Thank you for standing up to crypto. Thank you for standing up for the rights of those investors who care about the environmental impact on their of their investment.”
Thus, as the dust settles on the recent congressional hearing, it will be intriguing to see where Gary Gensler finds himself by 2025.
Will he remain as SEC Chair, potentially facing dismissal if Donald Trump secures a return to power, or will he be appointed as Treasury Secretary in the event of a Kamala Harris victory, as rumors suggest?
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