Being bombarded by Republicans, what did the chairman of the US SEC say in the hearing of the House of Representatives?

Original author: Mary Liu, BitpushNews

On April 18, local time, Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), attended a hearing of the House Financial Services Committee to defend the agency's aggressive regulatory practices. This is Gensler's first appearance before a panel since October 2021. It was also his first appearance before the Republican-controlled House Financial Services Committee.

Original author: Mary Liu, BitpushNews

On April 18, local time, Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), attended a hearing of the House Financial Services Committee to defend the agency's aggressive regulatory practices. This is Gensler's first appearance before a panel since October 2021. It was also his first appearance before the Republican-controlled House Financial Services Committee.

Context: GOP lawmakers propose ouster of Gensler amid industry complaints

Since the collapse of the FTX exchange last year, the SEC under the leadership of Gensler has significantly strengthened its enforcement efforts against the encryption industry, and has specifically targeted the industry's top players, such as issuing a Wells notice to Coinbase and prosecuting TRON founder Justin Sun (Justin Sun) And the Tron Foundation, BitTorrent Foundation, etc. related to him.

The actions drew criticism from Republicans, with Senator Warren Davidson introducing new legislation that would have removed Gensler and filled the vacancy with the SEC's executive director. House Financial Services Committee Chairman Patrick McHenry said in his tweet that the SEC’s crackdown on cryptocurrencies had failed to bring stability to the digital asset market, writing: “Your practices are driving innovation overseas and jeopardizing U.S. competitiveness.”

U.S. business groups are also opposing the SEC's aggressive regulation, with Tom Quaadman, executive vice president of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness, recently writing to the House Financial Services Committee in which the group said: "The SEC's profusion of rulemaking is unprecedented and worthy of Congress. Closely scrutinized."

Ahead of the hearing, a panel of Republican lawmakers sent an open letter to Gensler, slamming the SEC's oversight of digital assets, particularly Gensler's repeated calls for cryptocurrency trading platforms to register with the agency.

"Your failure to provide a path to allow digital asset trading platforms to register without clear rules of the road, your push for companies to 'come in and register' is a willful misrepresentation of the non-existent SEC registration process," the lawmakers wrote. Lack of registration The sole responsible entity for persons is the SEC itself.”

Gensler: Most Crypto Tokens Are Securities

Gensler brushed off criticism from Republican lawmakers, saying in written testimony to the House Financial Services Committee: “…Given that most crypto tokens are securities, many crypto intermediaries are trading in securities and must Registered with the SEC."

Rep. Josh Gottheimer said in the hearing that the SEC has provided very "limited" specific guidance for digital asset companies that want to comply. Gottheimer said: "Under your leadership, the SEC has mainly used enforcement actions to promote compliance. The lack of formal guidance in the normal rulemaking process creates more uncertainty in the area.” Gensler responded that the SEC has given more formal definitions and updates, and that these new measures will be forthcoming.

"Over the past two years, we have brought nearly 1,500 enforcement actions and conducted more than 6,000 checks on registrants," Gensler said. "We have engaged with more than 40,000 registrants - Asset Management Firms, brokers, dealers, exchanges, fund integration providers, listed companies, and more, the dedicated staff of the institution have done a fantastic job with limited resources.”

Gensler Declines to Clearly Respond to Whether Ethereum Is a Commodity or a Security

At the hearing, Patrick McHenry, chairman of the House Financial Services Committee, repeatedly asked SEC chairman Gary Gensler whether Ethereum is a commodity or a security. Gary Gensler repeatedly refused to answer clearly, on the grounds that the SEC has always been inconvenient to publish the "facts and circumstances" of specific cases. Comment.

Asked whether Ripple's token, XRP, is a security, Gensler responded that the case is currently pending.

McHenry also alluded to a possible "turf war" between the SEC and the Commodity Futures Trading Commission (CFTC), with Rostin Behnam, chairman of the CFTC, which oversees derivatives, has said that Ethereum falls under the CFTC's jurisdiction. And New York Attorney General Letitia James called Ethereum an unregistered security in an enforcement action against crypto firm KuCoin. Therefore, there is still no consensus at the federal level on whether Ethereum is a security or a commodity.

SEC doesn't rule out taking action against divorced companies

Several Republicans brought up the SEC's handling of Silvergate's most high-profile client, FTX, during the hearing. McHenry recently sent a letter to Gensler asking for more information about the SEC's allegations against Sam Bankman-Fried, and Gensler said Tuesday he has an obligation to keep the matter of the investigation confidential.

Asked by Rep. Ritchie Torres of New York why the SEC chose not to take action against other offshore firms like Binance (especially after the FTX failure), Gensler said the agency is committed to taking appropriate action against any company that interacts with U.S. investors, even if These offshore companies are not registered in the United States.

Gensler contends that offshore companies may be doing business illegally with U.S. clients and that the SEC has jurisdiction over those cases. "It took longer to build the investigation file," Gensler said. It sometimes takes longer to work with offshore law enforcement and, frankly, it is challenging to get them to comply with a subpoena if a foreign company is involved.”

Rep. Tom Emmer, a prominent cryptocurrency ally, asked Gensler, "Are you concerned that what you're doing to the digital asset industry is effectively driving the industry out of America?" If they don’t follow the law, then they shouldn’t be offering products to U.S. investors, and if they follow the law and do the right thing for investors, they can be here.”

Stablecoins, Crypto Banking Issues

Stablecoin regulation is also at the heart of the SEC and CFTC's battle for jurisdiction. Behnam, chairman of the CFTC, said last month that stablecoins fall under the jurisdiction of the CFTC until the new comprehensive regulatory framework of Congress and the Biden administration is introduced, and the US Securities and Exchange Commission has also claimed jurisdiction over these assets. An executive proposal was signed to create the framework.

At the hearing, Republican Congressman French Hill asked Gensler if he wanted to see laws around stablecoins. Gensler gave a conditional affirmative but warned "not to destroy the $100 trillion capital market." Stablecoin legislation proposed by a regulatory panel led by Minister Janet Yellen.

During the hearing, Gensler also sought to link the recent failures of SVB and Signature Bank to their work with clients in the digital asset industry, noting that Circle holds $3 billion in USDC reserves at SVB.

During the hearing, Democratic lawmakers led by Ranking Member Maxine Waters (D-Calif.) defended Gensler's digital asset strategy, arguing that his approach was "dramatically different" from that of previous SEC officials.