Securities and Exchange Commission Chairman Gary Gensler was given a torrid time on Wednesday in Congress from both sides of the house. A subpoena was threatened by Republican McHenry for failure to show transparency in dealings with FTX and its former CEO Sam Bankman-Fried.
House Financial Services Committee hearing
After providing his written testimony to Congress, Gary Genser, Chairman of the SEC, appeared in person on Wednesday at a hearing of the House Financial Services Committee.
For Gensler, the hearing provided what was for him another tough grilling akin to the last time he appeared in front of this committee. Congressmen and women from both sides of the House put the extremely guarded SEC chair through his paces.
Democrat Maxine Waters started the ball rolling with 5 minutes of questions. However, being a staunch critic of crypto, Waters lauded praise on Gensler and then used the rest of her time to ask questions that were all available publicly.
A lack of responsiveness
The heat on Gensler was turned up to maximum though by Patrick McHenry, Chairman of the House Financial Services Committee, who did not hold back.
McHenry accused Gensler of a “lack of responsiveness” in his agency’s replies to Congress, referring to the SEC’s dealings with Sam Bankman-Fried and the bankrupt FTX crypto exchange. The FSC Chairman told Gensler that he was “not above the law” and that unless more transparency was forthcoming, a subpoena from Congress was not out of the question.
McHenry opened his 5 minutes by questioning Gensler on whether he thought Bitcoin was a security or a commodity. After much beating around the bush Gensler admitted it wasn’t a security according to the Howey test, but did not go as far as to say it was a commodity.
Pokemon card - Security or not?
Democrat Richie Torres asked Gensler if purchasing a Pokemon card could be considered a security transaction, to which Gensler replied that it wasn’t. Torres then asked if he purchased a “tokenised Pokemon card on a digital exchange” would this be a “security treatment?”.
Gensler rebuffed the congressman by saying “I’d have to know more.” To which Torres responded: “So for you, the process of tokenisation is what transforms a non security transaction into a security transaction?”
Regulation by harassment
And finally, Congressman Tom Emmer was scathing when he quoted Gensler himself as saying last year in a speech:
“Several bank executives have shared their concerns with me about the sheer number of depositors who have moved their money from their bank accounts into crypto-related exchanges and wallets.”
Emmer asked Gensler if this was correct and then claimed back his time when the SEC chairman did not give a direct answer. He then went on to cite another case where a judge had stated that DeFi cut out the middleman and allowed users to interact in an easy and efficient way.
The congressman went on to say:
"Mr Gensler, can you assure this committee that your style of regulation by harassment towards digital style innovation is to the benefit of every American and not driven by your desires to protect the industry incumbents?"
Emmer ended by saying that even the Federal Courts have highlighted the damage done by Gensler’s SEC and have stated that the agency does not have the legal authority to crush competition in the financial markets.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
