SEC Chair Accused of Misleading Congress About Ether's Security Status
Summary:
Patrick McHenry, Chair of the U.S. House Financial Services Committee, has accused Gary Gensler, Chair of the SEC, of misleading Congress over labelling Ether (ETH) as a security. His claim is based on a lawsuit by Consensys against the SEC, highlighting inconsistencies in their approach to digital assets. McHenry maintains Gensler evaded questions about Ether during a Committee hearing, amid signs the SEC may already consider Ether a security. The controversy could influence the approval of spot Ether exchange-traded funds and impact the passage of the Financial Innovation and Technology for the 21st Century Act (FIT21).
In a recent allegation, Patrick McHenry, Chair of the United States House Financial Services Committee, has accused Gary Gensler, Chair of the Securities and Exchange Commission (SEC), of intentionally giving misleading information to Congress about the SEC's attempts to label Ether (ETH) as a security. McHenry's claim on April 30 was based on Gensler's testimony before the committee, which he believes was deceptive.
The allegation stems from recent claims in a lawsuit filed against the SEC by software development firm Consensys on April 25. The lawsuit, filed in the U.S. District Court for the Northern District of Texas, brings attention to public inconsistency in the SEC's handling of digital assets, particularly Ether, as securities.
Accentuating this inconsistency is the SEC's investigation into Ether as a security in March 2023, a detail revealed through unredacted sections of the court filing that became public on April 29. This raises questions about the SEC's stance during Gensler's April 2023 testimony, where he evaded direct questions from McHenry on whether Ether fell under the jurisdiction of the SEC or the Commodity Futures Trading Commission (CFTC).
McHenry asserted during the Committee hearing, "A single asset can't simultaneously be a commodity and a security." He further inquired Gensler about the status of Ether, "In your capacity as the chair, can you clarify if Ether is a commodity or a security?"
The SEC's actions towards Ether could lead to potential conflict with the CFTC and affect the approval or rejection of spot Ether exchange-traded funds on U.S. exchanges. The SEC gave the green light to investment tools linked to ETH futures in October 2023. Experts anticipate a decision on a spot Ether ETF to come in May.
McHenry used this incident to encourage legislators to back the Financial Innovation and Technology for the 21st Century Act (FIT21), aiming to provide precise guidelines for the CFTC and SEC. This bill, cleared by the Committee in July 2023, is headed for a full vote on the house floor.
Published At
4/30/2024 7:01:27 PM
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