U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has explained why the securities regulator is taking a litigation-heavy strategy to regulate the crypto industry. The SEC chair insisted that enforcement actions against crypto firms are not brought with a political agenda, emphasizing that he is protecting the American public. “This is a field where the American public is at risk and being harmed every day on these platforms that are commingling and often trading against their customers,” he cautioned.
Gensler Reveals Why SEC Focuses on Litigation in Regulating Crypto
The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, testified before the House Financial Services Committee on Wednesday. During the hearing, several members of Congress raised questions about cryptocurrency and the regulation of crypto tokens.
Congressman John Rose (R-TN) asked Gensler: “Regarding cryptocurrencies … I’m interested in why you have pursued a litigation-heavy strategy despite the fact that neither you nor any of your senior staff are litigators — neither your Chief of Staff nor your Policy Director or even your General Counsel. Why have you settled on such a litigation-heavy strategy to address the cryptocurrency market?” Gensler replied:
Frankly, it’s because the field is so rife with hucksters and fraudsters and non-compliant parties … This is a field where the American public is at risk and being harmed every day on these platforms that are commingling and often trading against their customers.
Nonetheless, the SEC chairman added: “We’ve also done rulemaking: one related to broker-dealers that was completed a number of years ago and then others related to the definition of exchange and the custody role.”
The congressman from Tennessee then told Gensler: “In my view, it seems that these cases are brought with an explicit political agenda, not a substantive legal one.” Gensler quickly refuted: “Nothing can be further from the truth. There’s nothing, the only thing political is protecting the American public.”
‘I’m Convinced You Are Not an Impartial Regulator’
Noting that Gensler used to work at a bank, Rep. Tom Emmer (R-MN) asked Gensler: “Can you assure this committee that your style of regulation by harassment towards digital asset innovation is for the benefit of every American and not driven by your desires to protect industry incumbents.” However, the SEC chair replied: “This is a field that’s rife with fraud and manipulation and I’m looking out for the American investors who’ve been hurt by crypto.”
Before Gensler could finish his response, he was interrupted by Congressman Emmer, who stressed:
Mr. Gensler, despite your years of rhetoric, today I’m convinced you are not an impartial regulator. 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.
Gensler Says Crypto Tokens Are Not Currency
Rep. Al Green (D-TX) raised concerns that many people believe that “crypto amounts to a giant Ponzi scheme.” Comparing crypto to the U.S. dollar, Gensler emphasized:
Crypto tokens are really quite something different. They’re not a currency.
“They don’t fulfill the three functions of a currency, of a store of value, a unit of account, a medium of exchange. They might, maybe, another day but not in 2023,” Gensler noted.
Lawmaker Wants Gensler Fired
During the hearing, Congressman Warren Davidson (R-OH) highlighted several problems at the SEC, noting that in April, he “proposed a solution called the SEC Stabilization Act.” He explained that the bill would “remove the role of chairman,” adding: “It would preserve the current commissioners but it would add a sixth commissioner so there would be no more than three from any one political party.” The lawmaker concluded:
I wish the Biden administration would say you’re fired.
Do you think SEC Chair Gary Gensler should be fired? Let us know in the comments section below.
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