- SEC chairman Gensler and Republicans chairman Patrick McHenry get into a heated debate regarding crypto policies.
- Republicans oppose SEC’s new crypto policies and demand greater transparency.
The recent contention between Gensler, the chairman of the U.S. Securities And Exchange Commission (SEC), and the Republicans on 18th April 2023 indicated the need for clear and transparent crypto rules to avoid further dissent and confusion. The hearing presided by the House Financial Services Committee indicated a clear tension between the SEC and the Republicans regarding the regulation of digital assets and policies regarding them.
Does that open room for newer crypto regulations working in favour of crypto markets? Here’s a series of events and popular tweets you must know.
The Republicans Send a Letter to the SEC
Prior to the hearing, the chairman of the Republicans, Patrick McHenry, sent a letter to Gensler stating the body’s dissent regarding the SEC’s new policies regarding the regulation of digital assets, and its attempts to enforce these policies on the trading platforms. According to the policy, all trading platforms had to be registered under the National Security Exchange (NSE).
Such a policy indicates that the SEC considers digital assets to be securities and hence needs to be placed under the NSE. However, the Republicans also demanded a clear declaration of which digital assets are considered as securities. No wonder, making such a demarcation seemed challenging to the NSE.
The Republicans were against SEC’s approach towards the crypto market, especially because they deemed NSE to be an unfit and ineffective network to control the crypto ecosystem. Thus, the letter clearly demanded new policies and clearer mandates regarding digital assets to encourage investor activities.
In other words, the Republicans deemed the current SEC policy to be discouraging for crypto investors and overall a failure for the US crypto market.
Hence, the letter suggested the SEC join hands with Congress and ensure complete transparency of laws and frameworks related to digital assets in order to avoid confusion between investors and consumers.
Gensler was Accused of Inefficiency
While the Republicans’ letter indicated their overall disappointment regarding the operations and policies of the SEC, they also accused Gensler of inefficiency.
According to the body, the SEC chairman forced the trading platforms to register under the NSE without proper mandate or registration guidelines. Such a move highlights the inefficiency of the body and its non-transparent activities, which according to the Republicans, could be detrimental to the boom of the crypto market in the US.
Gensler Says Legal Compliance Isn’t a “Choice”
Following the letter by the Republicans, Gensler was seen addressing the complaints of the latter in the hearing.
According to the SEC chairman, all digital assets are considered to be securities, and it is for the public good that they must follow the security laws.
He also emphasized on the various crypto scams and money laundering activities that are carried out in the network, highlighting the importance of trading platforms registered under the NSE.
Genler highlighted the current crypto market in the USA, indicating how its non-compliance with the laws has led to growing crypto thefts, affecting investor motives.
In short, the chairman defended the SEC’s mandate claiming it to be in the best interests of investors. In fact, Gensler is also seen critiquing the demands of the Republicans, stating them to be against the protection of crypto investors.
Open Conflict of Interests Between McHenry and Gensler
With Gensler defending the SEC’s mandate on handling digital assets, an open conflict was ensured between him and McHenry. The latter openly challenged the SEC chairman regarding his policy on Ethereum, questioning whether it was an asset or a security.
While Gensler passed the question, he was also seen being critiqued for his hasty decision-making without consulting potential stakeholders. Needless to say, the hearing led to a long-drawn debate between the two chairmen, each trying to establish their points.
SEC Chairman Criticized for His Lack of Awareness
As the hearing proceeded, it highlighted that SEC was unaware of the operations and intricacies of various crypto exchange platforms like FTX. Such incompetencies were soon taken up on Twitter, critiquing Gensler’s knowledge about the crypto market in general.
Andy Barr, a representative also questioned Gensler about the body’s lack of knowledge about FTX and its operations.
American investors and our capital markets are at risk under the Biden Administration and @SECGov Chairman Gensler. The rushed rulemaking out of the SEC is dangerous and irresponsible. See my full line of questioning ⬇️ pic.twitter.com/ujrr96K6bQ
— Rep. Andy Barr (@RepAndyBarr) April 18, 2023
Other representatives also brought down the chairman’s claims with his previous statements about digital assets.
As we are waiting for the hearing to start, the committee's Republicans sent a joint letter about an hour ago to Gensler slamming his "come in and register" line to crypto…
— CryptoLaw (@CryptoLawUS) April 18, 2023
However, that was not all, Emmer, another representative, also spoke publicly about Gensler’s incompetence in handling digital assets. Seems like the chairman had a tough time through the hearing.