Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), has provided an explanation of why the securities watchdog is approaching the regulation of the cryptocurrency market through litigation. The SEC head emphasized that he is defending the American public and underlined that enforcement proceedings against cryptocurrency firms are not being filed with a political intent. "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," he warned.
Gensler Explains Why the SEC Concentrates on Litigation in Crypto Regulation
On Wednesday, Gary Gensler, the head of the Securities and Exchange Commission (SEC), gave a testimony before the House Financial Services Committee. Several Congressmen questioned the regulation of crypto tokens and cryptocurrencies during the session.
Gensler was questioned by Congressman John Rose (R-TN) about cryptocurrencies. I'm curious as to why you have chosen a litigation-intensive strategy given that neither you nor any of your senior staff members — not even your general counsel or director of policy — are litigators. Why have you chosen to attack the cryptocurrency business with such a litigious approach? Gensler's response:
Frankly, it's because there are so many hucksters, fraudsters, and non-compliant parties in the field... On these platforms, which mix and frequently trade against their consumers, the American public is put at risk and hurt every day.
The SEC chairman still continued, "We've also done rulemaking: one related to broker-dealers that was completed a number of years ago, and then others related to the definition of exchange and the custody role."
After that, the Tennessee representative said to Gensler, "In my view, it seems that these cases are brought with an explicit political agenda, not a substantive legal one." Gensler instantly disputed: "Nothing could be more false. There is nothing; the sole political issue is safeguarding the American people.
I'm convinced that you are not an unbiased regulator.
Rep. Tom Emmer (R-NC) brought up the fact that Gensler had previously worked for a bank and questioned Gensler, saying, "Can you assure this committee that your style of regulation by harassment towards digital asset innovation is for the benefit of every American and not driven by your desires to protect industry incumbents." But the SEC chair responded, "I'm looking out for the American investors who have been hurt by crypto. This is a field that's rife with fraud and manipulation."
Congressman Emmer cut off Gensler's response before he could finish it, emphasizing:
Despite your statements throughout the years, Mr. Gensler, I'm now convinced that you are not an unbiased regulator. Instead, it's obvious that you're trying to increase your own influence despite the fact that doing so means stifling prospects for regular Americans and, to be honest, the nation's economic future.
Crypto Tokens Are Not Money, According to Gensler
Representative Al Green (D-TX) expressed concern that a lot of individuals think that "crypto amounts to a giant Ponzi scheme." Gensler stressed the following when comparing cryptocurrency to the dollar:
Crypto tokens are genuinely extremely unique. They don't serve as money.
"They don't serve the three purposes of a currency, which are to serve as a unit of account, a store of value, and a medium of exchange. In 2023, they might, perhaps, but not then, said Gensler.
A legislator wants Gensler fired.
Congressman Warren Davidson (R-OH) highlighted a number of SEC issues during the hearing, stating that he "proposed a solution called the SEC Stabilization Act" in April. The bill would "remove the chairman's role," he said, "while maintaining the current commissioners and adding a sixth so that there would be no more than three from any one political party." Finally, the congressman said:
The Biden administration ought to dismiss you, in my opinion.
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