Representative Tom McHenry says Gary Gensler’s SEC acted inconsistently in its pursuit of cryptocurrency. Gary Gensler, president of the United States The Securities and Exchange Commission said that his organization lacks the authority and does not intend to ban cryptocurrency.
Gensler stressed during a House Committee on Financial Services hearing on Oct. 5 that outlawing cryptocurrency is not within the SEC’s mission, stating: “That would be up to Congress.”
“It’s a matter of integrating this field into our investor consumer protection framework and also collaborating with bank regulators and others — ensuring that the Treasury department incorporates it into anti-money laundering and tax compliance,” Gensler explained.
“Many of these tokens do match the SEC‘s definition of an investment contract, note, or security,” he continued, highlighting the importance of bringing crypto “inside the SEC’s investor protection remit.”
Gensler also identified stable coins’ potential impact on financial stability as a priority for the agency. Representative Patrick McHenry criticized the SEC’s activities and attitude on digital assets during the hearing, accusing Gensler of failing to follow the agency’s “long-held practice of noticing comment on rulemaking and processes.”
“Some of those comments you have made have raised questions in the marketplace and made things less than clear. You’ve made seemingly off the cuff remarks that move markets, you’ve disregarded rule-making by putting a statement out without due process, and you’ve essentially run roughshod over American investors.”
According to Gensler, the SEC adheres to the administrative processes statute. McHenry also noted comments Gensler made before the Committee in 2019 while teaching at MIT, in which he questioned prior SEC rulings defining Bitcoin and Ether as commodities.
When asked about his current position on the matter, Gensler stated, “I’m not going to get into any particular token, but I believe the securities laws are quite clear — if you’re raising money […] and the investing public has a reasonable expectation of profit based on the efforts of others, that falls within the scope of the securities law.”
The hearing occurred on the same day that McHenry introduced the Clarity for Digital Tokens Act of 2021, which is heavily modeled after the pro-crypto SEC Commissioner Hester Peirce’s February 2020 safe harbor proposal.
McHenry pushed Gensler at the hearing about whether he had taken the time to consider Peirce’s plan. While Gensler evaded the question of whether he had explicitly examined Peirce’s proposal:
“Commissioner Peirce and I discussed her views on a possible safe harbor. I believe that the challenge for the American public is that unless we monitor this and institute investor protection, people will suffer.”
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