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SEC Chair Gary Gensler Grilled in U.S. House Committee, Says He Has Done Well for Himself, Also Crypto Not a Currency
On Wednesday, local time, the U.S. House Committee on Financial Services met for an oversight hearing regarding the Securities and Exchange Commission (SEC) and posed some crypto-related questions to Chair Gary Gensler.
Gensler, who said that he enjoyed these testimonies, endured over four hours of questioning, with some moments tougher than others. A day prior to the hearing, Congressmen Mike Flood, Wiley Nickel, Tom Emmer and Ritchie Torres sent a letter to the SEC chair to ask for the approval of Bitcoin Spot ETFs, which the SEC has been delaying for quite some time. However, this topic was not extensively discussed during the hearing.
Crypto is not Needed According to Chair
Congressman Al Green (D-TX) asked Gensler about minority groups that have been more affected by crypto losses and scams than others. He asked Gensler if he believed there could be a properly regulated digital currency, to which the chair replied:
“I think the U.S. dollar is quite strong, and we already use it as a form of digital dollar. Crypto tokens are something different. They are not a currency. They don’t fulfill the three functions of a currency – store of value, unit of account or a medium of exchange. Maybe in another day but not in 2023 quite frankly.”
Gary Gensler
This view contrasts quite sharply with what Gensler publicly communicated in previous years, including in lectures at MIT about cryptocurrency. He referred to XRP as a bridge currency and Ethereum and Bitcoin as the largest currencies in the space.
Gensler Faced Some Heavy Criticism
Gensler also faced some very critical remarks from the House Committee. Warren Davidson (R-OH) questioned the approach the SEC had under Gensler’s chairmanship, calling it “rulemaking without any regard for the impact of these rules.” Davidson criticised the lack of clarity and argued that the SEC’s approach is driving innovation out of the U.S.
He said, “You are not providing clarity with a rule that’s evenly applied. […] And the courts have even called this arbitrary and capricious.”
Gensler Thinks He Has Done Well for Himself
Majority Whip Tom Emmer (R-MN) has a history of grilling Gensler during these meetings. When asked if he made most of his money during his time at investment bank Goldman Sachs, Gensler responded, “I have done well since then too, Sir,” which received some laughter from the audience.
Emmer’s questions where more sinister, though, as he quickly questioned Gensler’s impartiality and ability to protect investors given his close links to the financial industry.
Gensler Under Cross-Examination
A highlight of the day was when Ritchie Torres (D-NY) cross-examined Chair Gensler about the term ‘investment contract.’ After Ripple achieved a partial win against the SEC, some raised the question if the SEC was the right regulatory body to oversee crypto. The question of whether an investment contract exists is crucial to determining if something is a security and if the SEC has authority over crypto. Torres referred to Gensler’s responses as “deafening and damning.”
Stuart Alderoty, Ripple’s Chief Legal Officer commented on X:
A Colorfoul Analogy
The starkest remarks of the day, however, came from Congressman Andy Barr (R-KY), who said to Gensler, “If the U.S. capital markets are a gold medalist, you are the Tonya Harding of securities regulation because you are kneecapping the U.S. capital markets with the avalanche of red tape coming out of your commission.”
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
