• The House Committee on Financial Services has accused SEC Chair Gary Gensler of having an inconsistent approach towards crypto regulation.
• Reps. Patrick McHenry, French Hill and Bill Huizenga have criticized Gensler for his emphasis on enforcement rather than providing clear guidelines for the industry.
• They also accused Gary Gensler of hindering their efforts to investigate his handling of the FTX incident.
House Committee Criticizes SEC Chair For Inconsistent Crypto Regulation Approach
The House Committee on Financial Services has sent a critical letter to SEC Chair Gary Gensler, accusing him of having a hypocritical stance on digital asset regulation. During the hearing on April 18th, Rep. Patrick McHenry brought attention to the lack of clarity in digital assets regulation, criticizing the commission’s regulation by enforcement approach.
Republican Lawmakers Challenge Gensler’s Regulatory Approach
McHenry – along with other Republican lawmakers such as Reps. French Hill and Bill Huizenga – challenged Gensler for his regulatory approach – arguing that he placed too much emphasis on enforcement rather than providing clear guidelines for the cryptocurrency industry. Additionally, they accused Gary Gensler of hindering their efforts to investigate his handling of the FTX incident.
Uncertainty Around Ether Classification
McHenry repeated questioned whether Ether should be classified as a commodity or a security, expressing concern about how this uncertainty would affect innovation within the space: “We need clarity but if we don’t get it from you then who do we get it from?” he asked. Despite this criticism, Gensler remained firm in his stance that Ethereum is both a commodity and a security under US law due to its features resembling those of both types of assets according to existing laws and regulations governing them.
SEC Chairman Defends Regulatory Decisions
Gensler defended himself by pointing out that many cryptocurrency projects face legal risks due to failing to comply with securities laws and noted that it was important for investors to understand these risks before engaging in any transactions involving digital assets: “It is important that people understand there are these legal rules… There is some risk associated with investing in these kinds of products.“ He also stressed that regulators must act prudently when introducing new rules concerning digital assets so as not to stifle innovation within this space without providing adequate protection for investors at the same time.
The exchange between McHenry and Gensler highlights growing concerns among lawmakers about how best to regulate cryptocurrencies without stifling innovation or leaving investors vulnerable to fraud or abuse in what is still an emerging asset class with no established regulatory framework yet in place. As more attention continues to be paid towards this space, it will be interesting to see what kind of regulations are eventually put into place — if any — and how they will affect investor behavior going forward into 2021 and beyond