SEC Chief Gary Gensler Grilled By Congress Over Market Regulations and Bitcoin
Summary:
SEC Chief Gary Gensler faced intense Congressional interrogation, particularly concerning his regulatory measures on U.S. capital markets. Accusations include over-regulation and failing to answer questions regarding Bitcoin and Pokemon cards. Specific representatives expressed wishes for his dismissal, while discussion around whether Bitcoin is a security or a commodity and the nature of investment contracts were key points. Meanwhile, a Coinbase "Stand With Crypto" logo was displayed behind Gensler, hinting at Coinbase's ongoing push for improved cryptocurrency legislation in the U.S.
Gary Gensler, chief of the United States Securities and Exchange Commission (SEC), found himself under intense scrutiny from Congress this week, accused of stymieing the U.S. capital markets and evading questions on Bitcoin and Pokemon cards. His return to Congressional hearings came on September 27 to discuss his authority over the markets. Congressman Andy Barr likened Gensler's regulatory measures to the infamous Tonya Harding ice skating incident, suggesting that Gensler was crippling U.S. capital markets with excessive regulation. Barr harkened back to previous assertions from Gensler that the U.S. holds the world's leading, most sophisticated, and innovative capital market, an assertion he believes Gensler takes for granted.
U.S. Representative Warren Davidson expressed his wish for the Biden administration to dismiss Gensler, accusing him of using his position as SEC Chair to advance his personal political and social views. Davidson also held hopes that the SEC Stabilization Act that he proposed with Tom Emmer, another U.S. Representative, could bring this about. Gensler was given no opportunity to respond to these remarks.
When questioned by the chair of the U.S. House Committee on Financial Services, Patrick McHenry, about whether Bitcoin is a security, Gensler finally conceded that Bitcoin doesn't satisfy the requirements of the Howey Test. Therefore, Bitcoin is not a security. However, Gensler sidestepped McHenry's suggestion that Bitcoin is a commodity, stating it falls outside the bounds of U.S. securities laws. He also sidestepped commenting on accusations of stifling the growth of the digital asset ecosystem and a lack of transparency about the SEC's dealings with FTX and its ex-CEO, Sam Bankman-Fried.
In a line of questioning about what makes an investment contract, U.S. Representative Ritchie Torres challenged Gensler with the hypothetical of buying a physical Pokemon card and whether it would be deemed a securities transaction. Gensler concluded that it would not be a security if purchased in a shop. However, if a tokenized Pokemon card were bought on a blockchain-based digital exchange, Gensler was unsure whether it would constitute a security transaction, necessitating more information.
During the exchange between Gensler and the U.S. Representatives, attentive viewers noticed a Coinbase "Stand With Crypto" logo displayed behind Gensler. The logo is part of a 14-month campaign by Coinbase launched in August to advocate for cryptocurrency legislation in the U.S. On September 27, the day of the hearing, Coinbase also hosted a "Stand with Crypto Day" in Washington, D.C. to call for improved cryptocurrency innovation and policy.
Published At
9/28/2023 5:26:14 AM
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