Gary Gensler, the chairman of the United States and Exchange Commission, has once again expressed his affections towards cryptos. He confirmed that his agency is neither mandated nor has intentions to prohibit cryptocurrencies in the country.
In an October 5 House Committee on Financial Services hearing, Gensler emphasized that prohibiting crypto trading in whatever way does not fall within his agency, stating:
“That would be up to the House of Congress.”
Nonetheless, while responding to some of emerging questions about regulatory concerns, Gensler stated:
“It’s a matter of how we get this field within the investor consumer protection that we have and also working with bank regulators and others — how do we ensure that the Treasury department has it within anti-money laundering, tax compliance. Many of these tokens do meet the test of being an investment contract, or a note, or a security.”
He insisted on the need to bring crypto “within the investor protection remit of the SEC.”
In the same context, Gensler noted that the financial stability issues that stablecoins eventually pose could rise as a priority for the agency.
Congressman Patrick McHenry used that opportunity to slam the SEC over regulatory actions and stance on cryptos under Gensler leadership. McHenry accused the SEC chair of failing to act per the agency’s “long-held malpractice of noticing comment on rule-making and procedures.”
“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.”
Nonetheless, the SEC chair responded to Congress, insisting that his commission follows the administrative procedures act.
In a subsequent comment, McHenry cited earlier remarks that Gensler made to the Committee in 2019 while he was teaching at MIT. At the time, Gensler had criticized SEC rulings classifying Bitcoin and Ether as commodities.
When asked about his current opinion on the matter, Gensler responded:
“I’m not going to get into anyone token, but I think the securities laws are quite clear — if you’re raising money […] and the investing public […] have a reasonable expectation of profits based on the efforts of others, that fits within the securities law.”
Surprisingly, the hearing appears the same day McHenry tabled the Clarity for Digital Tokens Act of 2021. The draft bill draws heavily on the safe harbor proposal forwarded earlier by pro-crypto SEC Commissioner Hester Peirce in February 2021.
Once more, McHenry slammed Gensler challenging him whether he took time to review Peirce’s proposal. Nevertheless, Gensler intelligently evaded answering McHenry’ concerns, mentioning:
“Commissioner Peirce and I have talked about her thoughts around a potential safe harbor. I think that the challenge for the American public is that if we don’t oversee this and bring in investor protection, people are going to get hurt.”