Gary Gensler, the Chairman of the United States Securities and Exchange Commission (SEC) has explained why the regulatory body is taking a litigation-heavy strategy to regulate the digital asset industry.
On September 27, Gensler testified before the House Financial Services Committee. During the hearing, he faced questions from various members of Congress regarding the regulatory framework for “crypto tokens.”
Congressman John Rose (R-TN) asked Gensler why he’s pursuing said strategy to address the digital assets regulation when neither he nor his top advisors have a background in the matter. 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.”
Crypto Tokens are Not Currency: Gary Gensler
Representative Al Green (D-TX) expressed worries about the public perception that “crypto” resembles a massive Ponzi scheme. In response, Gensler drew a distinction between tokens and the U.S. dollar, stating:
“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.”
Commenting on the recent legal cases the SEC is fighting with several major firms, a Tennessee Congressman remarked, “In my opinion, it appears that these cases are brought with an explicit political agenda, not a substantive legal one.” Gensler promptly countered, stating that the sole political aspect here is protecting the American public. He added:
“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.”
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The SEC is fighting legal battles with multiple digital asset companies, including exchanges Binance and Coinbase. While the agency is facing major criticism from the general public, Congressmen also criticized Gensler’s actions.
During the hearing, Rep. Tom Emmer (R-NC) stated that the SEC Chair is working “to consolidate [his] own power even though it means crushing opportunities for everyday Americans and frankly the financial future of this country.”
On the other hand, Congressman Warren Davidson (R-OH) reiterated his proposal called the “SEC Stabilization Act.” He explained that the bill aims to eliminate the position of chairman within the SEC, 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.”