Lawmakers from both major parties in the House of Representatives on Tuesday renewed their attacks on Wall Street’s chief regulator over his agency’s policies on cryptocurrencies, accusing the U.S. Securities and Exchange Commission of hampering the industry’s growth.
The sometimes heated questioning coincides with mounting election-year political pressure and soaring campaign cash contributions from the industry, which SEC Chair Gary Gensler has described as rife with criminality and other non-compliance leading to steep investor losses.
All five of the SEC’s members appeared on Tuesday at a hearing of the U.S. House Financial Services Committee, only the third time this has happened in the past 17 years, allowing Republican commissioners to voice dissent alongside its majority Democratic members.
Senior Republican lawmakers were joined by some Democrats in expressing stern displeasure.
Committee Chairman Patrick McHenry, a Republican, said the SEC had referred to digital assets using a series of different terms that left the crypto industry unsure was to what assets fell under SEC jurisdiction.
Gensler said the distinction was “less about the terms. It’s more about the economics,” referring to Supreme Court precedent on the definition of securities as investment contracts.
However, Republican Commissioner Hester Peirce, a vocal critic of Gensler’s policies, said the agency had “taken a legally imprecise view to mask the regulatory lack of clarity.”
This created questions as to whether an asset was a security, part of an investment contract or sold alongside one, which then affected sales, Peirce said.
Since taking office, Gensler has insisted the existing securities laws are sufficient for regulating the crypto industry, rebuffing calls for industry-specific regulations.
Gensler also defended a 2022 SEC accounting bulletin that lawmakers in May unsuccessfully sought to rescind and which calls on public companies safeguarding crypto assets to record them as balance sheet liabilities.
A series of bankruptcies had shown the practice was justified, Gensler said.
Gensler also said, depending on the outcome of November’s elections, his agency could try again to issue regulations governing corporate disclosures about share buybacks, following a 2023 court decision striking down an SEC rule adopted last year.