Patrick McHenry, Chairman of the US House of Representatives Financial Services Committee, launched fully into criticizing the Securities and Exchange Commission and its leadership on digital assets at an oversight hearing.
At an April 18 hearing on SEC oversight, Rep. McHenry used his keynote speech to bring up the commission’s “punishment” of companies that handle digital assets through regulation by enforcement measures. without a clear path to compliance. The congressman reiterated his call for US lawmakers to set “clear rules of the game” for cryptocurrencies through legislation. Furthermore, he lobbied SEC Chairman Gary Gensler for a definitive answer on whether Ether (ETH) can be considered a security under the SEC or a commodity under the Commodity Futures Trading Commission. .
McHenry repeatedly spoke about Gensler’s responses that did not include specific details, citing the SEC chair’s willingness to label Bitcoin (BTC) as a commodity and hinting at private discussions about ETH ahead of the hearing.
“Clearly an asset cannot be a commodity and a security at the same time,” McHenry said. “I’m asking you, sitting in your chair now, to make an assessment under the laws as they exist, is Ether a commodity or a security?”
He further added:
“You’ve prejudged this: You’ve started 50 enforcement actions. We’re finding out as we go along, as lawsuits are filed, as people get Notices from Wells, about what is a value in your opinion, in your opinion from your agency.”
.@GaryGensler‘s tenure has been defined by recklessness. His agenda runs roughshod over process, precedent, & the #SEC‘s statutory authority. I look forward to speaking with him today.
Tune in at 10:00am https://t.co/qNdJ4wDkw5
—Patrick McHenry (@PatrickMcHenry) April 18, 2023
Rep. Maxine Waters, the ranking member of the House committee, did not press Gensler on the ETH issue, instead focusing her questioning on the SEC’s regulatory capabilities.. According to the SEC chairman, the commission has the wherewithal, the authority, and the will to bring crypto companies into compliance.
Many inside and outside of the cryptocurrency space have criticized the SEC under Gensler for taking action against companies related to digital assets and blockchain technology. On April 17, the SEC accused crypto-asset trading platform Bittrex and its co-founder William Shihara of offering unregistered securities, and a notice from Wells issued to Coinbase in March suggests the popular exchange could be next.
Gensler claimed that the cryptocurrency market was “rife with non-compliant projects”, many from companies doing so deliberately. His written testimony claimed that SEC compliance extended to decentralized finance platforms, an indication that the commission was proposing to change its rules to include DeFi in exchanges under its purview.
The April 18 hearing was the first time Gensler had addressed the House committee directly since October 2021 — before the collapse of FTX, Celsius, BlockFi, and pro-crypto banks like Signature, Silicon Valley Bank, and Silvergate. The Financial Services Committee will also meet to discuss stablecoin regulation at a hearing on April 19.
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