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Gary Gensler—chairman of the US Securities and Exchange Commission (SEC) – stood before the House Financial Services Committee (HFSC) on Wednesday for the first time since a judge sided with Grayscale in its appeal against the agency in August.
Patrick McHenry (R-NC), the committee’s chairman, and other crypto-supportive members have frequently blasted Gensler’s aggressive handling of the crypto markets. Today, those criticisms were sharp as ever.
“Our patience is wearing thin,” McHenry told Gensler during his opening statement of the hearing.
“Your efforts to choke off the digital asset ecosystem… is clear to all,” McHenry continued, accusing Gensler of causing “more confusion and lasting damage” with his actions while calling out his agency for its “losing streak” in the courts.
The SEC has frequently been criticized for failing to clearly express its views on specific digital assets’ relationships with securities laws before firing off lawsuits against crypto exchanges and issuers. McHenry pointed out that back in 2018, Gensler referred to Bitcoin, Ethereum, Bitcoin Cash, and Litecoin as non-securities—though his views on the latter three coins are less clear today.
“It does not meet the Howey test, which is the law of the land about being an investment contract,” Gensler said about Bitcoin during the hearing. “I would say it’s not a security.”
Rep. Tom Emmer (R-MN) was even more scathing, blasting Gensler for creating regulatory uncertainty that’s benefitted big businesses in the crypto industry over startups. He also noted Gensler’s 18-year history working with TradFi banking giant Goldman Sachs, where he accumulated much of his personal wealth.
“Despite your years of rhetoric, I’m convinced you are not an impartial regulator,” Emmer told the chairman. “Instead, it’s clear that you are working to consolidate your own power even though it means crushing opportunities for everyday Americans, and frankly the financial future of this country.”
He too highlighted the SEC’s recent court losses against firms like Ripple and Grayscale. “They’re telling you that you don’t have the legal authority to accomplish your goal of squashing competition in the financial markets.”
“A common theme throughout your career has been your relentless loyalty to the largest financial institutions at the clear expense of innovation, competition, and everyday Americans,” Emmer added.
Unlike McHenry and Emmer, HFSC ranking member Maxine Waters (D-CA) found Gensler’s actions on crypto to be praiseworthy, instead turning her ire to the Republican party.
“Our patience is wearing thinner,” Waters said in her opening statement, referring to her political opposition. Referencing major crypto failures like Terra and FTX last year, she highlighted the SEC’s actions in shutting down crypto firms and recovering funds for harmed investors.
“I just wanted to make sure that the opposite side of the aisle that the opposite side of the aisle, that protects [crypto firms] too often and in too many different ways, know what you’re doing,” she said.