The pressure on Gary Gensler is increasing. The SEC boss was at one last night Hearing in the Finance Committee of the US House of Representatives loaded. There he answered questions from the MPs. It was about topics such as sustainability rules in the financial sector, an impending US shutdown, but also crypto regulation.
The latter has been with the committee for quite some time. Since the beginning of the year, the SEC has imposed several penalties on crypto companies from the USA and taken some players such as Coinbase and Binance to court.
In his opening speech, the Republican chairman of the committee, Patrick McHenry, directly attacked the SEC boss. He criticized the SEC’s “lack of cooperation” in providing relevant documents. Among other things, this involved documents documenting the authority’s exchange with the insolvent crypto exchange FTX and its founder Sam Bankman-Fried.
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Since February, Congress has made several requests to the SEC. “So far you have not submitted a single document to us that was not also known to the public,” said McHenry. And further:
Our patience is getting thinner and thinner. The SEC is not above the law. It must support Congress in its duty of oversight. Let me be clear: I do not want to be the first chairman to have to issue a congressional order to an SEC chairman… We expect your cooperation. Either we do it the easy way or the hard way.
A congressional subpoena would be a legally binding measure equivalent to a court order. In this case, it would force the SEC to disclose documents.
Gary Gensler: “Bitcoin is not a security”
The exchange of blows continued after the opening speech. Members of the committee were allowed to ask questions of Gary Gensler. McHenry immediately took advantage of the opportunity to further target the SEC boss. “Is Bitcoin a security for you,” asked the chairman. Gensler’s response: “The criteria of the Howey test do not apply to Bitcoin…It is not a security.”
Gensler had previously repeatedly indicated that Bitcoin did not fall under the influence of the SEC. However, he has not yet made a clear statement that the cryptocurrency is not a security.
Democrats support Gensler
The SEC boss once again received support from the Democratic camp. It emerged that despite joint legislative proposals, the committee is divided on how the crypto sector should be regulated. “It appears to me that this sector is massively violating the law and ripping off investors,” said the committee’s Democratic co-chair, Maxine Waters.
Gensler echoed these sentiments: “It’s an area rife with fraud and manipulation… We’re kind of like a cop on patrol.”
Threatening shutdown causes political tensions
However, Maxine Waters also didn’t miss the opportunity to dish it out against the political opposition:
The chairman’s patience may be thin, but mine is even thinner when I think about the MAGA (Make America Great Again) Republicans who have taken over the House of Representatives.
She alludes to the budget dispute in the USA, which is now fought almost every year between Republicans and Democrats. In the worst case scenario, there is a risk of a “shutdown” that could affect thousands of officials – including at the SEC. Later in the hearing, Gensler revealed that his agency, which has around 5,000 employees, would have to furlough almost 92 percent.
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