Congress Confronts Gensler on SEC’s Crypto Regulation Approach

The U.S. House Financial Services Committee recently heard testimony from Gary Gensler, the chair of the Securities and Exchange Commission (SEC), and commissioners Hester Peirce, Mark Uyeda, Caroline Crenshaw, and Jamie Lizárraga regarding concerns regarding cryptocurrency regulation. They had not discussed cryptocurrency oversight since 2019. This was their first appearance.

SEC Criticized for Aggressive Crypto Enforcement

Lawmakers expressed frustration with Gensler’s regulatory approach toward digital assets, particularly the agency’s aggressive enforcement actions. Critics argue the SEC’s strategy has caused confusion and hindered growth in the crypto industry. For years, proponents of blockchain-based currencies have highlighted a lack of clear rules. Gensler, who believes most cryptocurrencies are securities, came under fire for his stance. Commissioner Peirce, known for opposing Gensler’s view, argued that the SEC has failed to offer proper guidance, creating more confusion than clarity.

Peirce’s sentiment was echoed by Representative French Hill, who accused the SEC of overstepping its authority. He stressed the need for congressional intervention to establish a clear regulatory framework, stating, “the SEC has been frontrunning Congress on crypto regulation.”

The debate also included Representative Tom Emmer, who criticized Gensler for coining vague terms like “crypto asset security.” Emmer highlighted how the SEC had recently walked back on the use of this terminology. Ranking member Maxine Waters urged that negotiations on stablecoin policies be completed before the retirement of Chair Patrick McHenry in 2025, as their ongoing discussions on fiat-pegged token regulation could shape the future of the digital economy.

Tension was heightened when a number of Republican MPs called for the repeal of Staff Accounting Bulletin 121, which has drawn flak for its alleged selective application. The SEC claims that this bulletin does not represent official policy. However, the discussion surrounding crypto regulation became even more convoluted when reports surfaced of secret meetings between SEC employees and particular businesses, raising questions about possible bias.