SEC Chairman Gary Gensler today faced a fierce grilling over the regulatory body’s role in defining rules for crypto, including the chairman's view that nearly all cryptocurrencies currently trading today are likely unregistered securities.
During a Thursday oversight hearing of the agency by the Senate Banking Committee, Republican Senator Pat Toomey suggested that the SEC wasn’t doing its job well enough.
Republicans are growing increasingly frustrated with the SEC’s agenda, with some lawmakers claiming Gensler, who became chair last year, is overstepping his authority.
“Unfortunately, some of the SEC’s recent actions and inactions raised concern about how well it’s carrying out this important mission [protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation],” he said.
With respect to the way in which the SEC has attempted to enforce securities laws as they might apply to crypto, Toomey further suggested that the Commission has not been as transparent as it should be. “The problem is that the SEC isn’t sharing with us the framework they’re using,” he said.
“Gary Gensler famously argues that virtually all crypto tokens are securities. I think reasonable people can disagree with that. He would exempt Bitcoin from that classification,” the senator continued. Toomey said Congress might need to step in and provide a clear framework for crypto investors and entrepreneurs, but that the SEC ought to provide “much more clarity” in the meantime.
.@GaryGensler owes investors and innovators alike more clarity on how he intends to apply @SECgov regulations to digital assets. pic.twitter.com/S8bz0tOmk7
— Senator Pat Toomey (@SenToomey) September 15, 2022
Such clarity may have helped to prevent the disastrous collapses of several crypto lending companies earlier this year, causing billions of dollars in losses. Toomey said the SEC did not do enough to help investors when, for example, Celsius and Voyager crashed and went bankrupt earlier this year. Both lenders promised huge returns to customers on their crypto deposits.
Gensler responded to Toomey by saying that many companies have not directly communicated with the SEC over listing and selling tokens and need to come forward and so so.
Gensler added that it was important to have “one cop on the beat” regulating cryptocurrency.
The SEC in July reportedly launched an investigation into America’s biggest crypto exchange, Coinbase, to see if it has listed unregistered securities.
Gensler has said previously, and today again confirmed, that it is the SEC’s position that most cryptocurrencies are securities. The SEC chief has said he believes Bitcoin is an exception and is not a security, but has declined to comment on any other specific coin, including Ethereum.