The high-stakes Congressional hearing on Tuesday saw the US Securities and Exchange Commission (SEC) Chair Gary Gensler facing sharp criticism alongside his fellow commissioners for handling digital assets. The crucial hearing reflected growing frustration with the SEC’s crypto oversight.
Committee Chair Patrick McHenry slammed Gensler for alleged regulatory overreach against digital assets. He accused the commission of acting like a rogue agency while aiming the agency’s aggressive actions against companies like Coinbase, Uniswap, and OpenSea.
Gensler’s SEC blasted for crypto overreach
The agency’s regulatory role around crypto has again landed in the spotlight as critics demand more transparent guidelines. With all five commissioners testifying, including Caroline Crenshaw, Jaime Lizárraga, and Mark Uyeda, the hearing brought to light the deepening divide over how the SEC regulates digital assets.
SEC Commissioner Hester Peirce also known as “crypto mom” voiced her concerns over the agency’s lack of clarity. We’ve taken a legally imprecise view to mask the lack of regulatory clarity,” Peirce noted while highlighting the confusion around the definition of securities in the crypto industry.
During the hearing, Congressman Brad Sherman stated “This is the premier agency to protect investors, and it has responsibility for virtually every other intangible investment asset.” He added, “We can provide clarity, although I don’t think it’s necessary, we could pass an additional statute to clarify that crypto is a security.”
🚨NEW: @HesterPeirce undermines @GaryGensler right off the bat, saying that the SEC has taken a legally imprecise view to mask the regulatory lack of clarity when it comes to #crypto:
“I think we've fallen down on our duty as a regulator not to be precise, and so tucking into a…
— Eleanor Terrett (@EleanorTerrett) September 24, 2024
Eleanor Terrett, a Fox Business journalist, reported that Hester Peirce undermined Gensler over the situation and suggested that the commission has taken a legally imprecise view to mask the regulatory lack of clarity when it comes to crypto.
“We’ve fallen down on our duty as a regulator by not being precise,” she said. Peirce highlighted that the agency should have long ago acknowledged that a token itself is not a security.
Crypto mom strikes back
Crypto Mom further criticized the SEC’s regulation by enforcement strategy and called it inefficient, creating uncertainty about the boundaries of the SEC’s authority.
Rep. French Hill pressed Jaime Lizárraga on the watchdog’s stance toward bipartisan crypto legislation, cutting in as Lizárraga deferred to Congress. The Lawmaker prompted Lizárraga to defend the SEC’s actions by citing the fraud risks in the crypto market.
Meanwhile, Gary Gensler repeated the SEC’s “merit neutral” position on blockchain technology. He stated that “Whether it’s on a blockchain ledger or not, we focus on the economics of the investment, and we remain merit neutral.”
SEC Chair once again leaned on the Howey Test to justify his agency’s approach to regulating digital assets. However, Rep Ritchie Torres (D-NY) sharply criticized Gensler’s interpretation, calling it idiosyncratic. Torres even warned that Gensler’s stance could blur the line between collectibles and securities, potentially classifying “any piece of art, music, or consumer good” as a security.
