Why SEC Chairman Gary Gensler Was Grilled During Senate Crypto Inquiry
On Thursday, US Securities and Exchange Commission (SEC) Chairman Gary Gensler spoke before the Senate Banking Committee to defend the agency’s stance on cryptocurrencies and its efforts to include climate risk in public company reports.
Pennsylvania Senator Pat Toomey has criticized the SEC for the lack of a cryptoregulatory framework. calls out Gensler for not realizing that cryptocurrencies are different from traditional investment products like bonds and stocks.
Almost all crypto offerings today, according to Gensler, meet the criteria for a traditional security and as such should be registered and regulated.
The head of the regulatory body argued his case to an SBC full of doubters, who questioned his claim that Bitcoin works more like a commodity and most tokens are more like conventional stocks.
Are the SEC and Gensler hostile to the financial industry?
Republican displeasure with Gensler’s agenda is a backdrop to the panel’s routine oversight of his work. He has been accused of going too far by SBC members who say he has taken a hostile stance against the financial industry and launched a sweeping attack on the US capital markets.
The Republican chairman of the SBC, Toomey, argued that the commission was not doing its job properly because of the unique characteristics of digital currencies like Bitcoin.
SEC Chair Gary Gensler. Image: Business Insider.
Toomey explains that crypto tokens can be settled in real time without intermediaries, have varying degrees of decentralization and normally have no financial cap on the issuer.
The senator also suggested that the commission has not been as fair as it should be in its efforts to enforce securities regulations that may apply to cryptocurrencies. The biggest problem, according to Toomey, is that “the SEC doesn’t share with us the structure they use.”
Another senator appalled by Gensler
Minnesota Republican Congressman Tom Emmer expressed displeasure with the SEC’s “unethical” treatment of cryptocurrency firms last July. He stated that Gensler “lures and threatens” companies.
The US is actively working on a framework for crypto regulations. A contentious issue is deciding between the agency and the Commodity Futures Trading Commission as the appropriate regulator.
As anticipated by the Senate legislation, CFTC chief Rostin Behnam revealed that he has already given the green light to his agency to begin preparing to be the lead regulator for a significant portion of the bitcoin market.
Gensler argued throughout the investigation that the Supreme Court has already decided what constitutes a security, and that most tokens pass a well-established multi-factor test.
However, Toomey and other opponents of the SEC’s approach find that explanation flawed.
Crypto total market cap at $925 billion on the daily chart | Source: TradingView.com Featured image from Fox Business, Chart: TradingView.com
