On Thursday, US Securities and Exchange Commission (SEC) Chairman Gary Gensler spoke before the Senate Banking Committee to defend the agency’s position on cryptocurrencies and its efforts to include climate risks in reports of public companies.
Pennsylvania Senator Pat Toomey has criticized the SEC for its lack of a crypto regulatory framework. calling out Gensler for failing to recognize that cryptocurrencies are different from traditional investment products like bonds and stocks.
Almost all current crypto offerings, according to Gensler, meet the criteria for a traditional security and as such should be registered and regulated.
The head of the regulator argued his case to a skeptical SBC, which questioned his claim that Bitcoin acts more like a commodity and most tokens are more like conventional shares.
Are SEC and Gensler Hostile Against the Financial Industry?
Republican unease with Gensler’s agenda is a backdrop for the panel’s routine oversight of his work. He has been accused of going too far by SBC members, who say he has taken a hostile stance towards the financial industry and launched a sweeping attack on US capital markets.
SBC Republican leader Toomey argued that the commission was not doing its job properly because of the unique characteristics of digital currencies like Bitcoin.
SEC Chair Gary Gensler. Image: Business Insider.
Toomey explains that crypto tokens can be settled in real time without intermediaries, have varying degrees of decentralization, and typically have no financial control over the issuer.
The senator also implied that the commission has not been as forthright as it should be in its efforts to enforce securities regulations that may apply to cryptocurrencies. The biggest problem, according to Toomey, is that “the SEC is not sharing with us the structure they’re using.”
Another senator dismayed by Gensler
Minnesota Republican Congressman Tom Emmer expressed his displeasure at the SEC’s “unethical” treatment of cryptocurrency companies last July. He claimed that Gensler “bait and threatens” companies.
The United States is actively working on a framework for cryptographic rules. A contentious issue is deciding between the agency and the Commodity Futures Trading Commission as the appropriate regulator.
As envisioned by the Senate legislation, CFTC chief Rostin Behnam revealed that he has already given his agency the green light to begin preparing to be the primary regulator of a substantial portion of the bitcoin market.
Gensler maintained throughout the investigation that the Supreme Court has already decided what constitutes a security and that most tokens pass a well-established multi-factor test.
However, Toomey and other opponents of the SEC’s approach find that explanation lacking.
Crypto total market cap at $925 billion on the daily chart | Source: TradingView.com Featured image from Fox Business, Chart: TradingView.com