Congress Is Tired Of The SEC's Crypto Policy: Demand Gensler's Firing
The day before, SEC Chairman Gary Gensler held a hearing before members of Congress. Gensler once again tried to explain the regulator's recent activities. The chairman faced criticism from congressmen, some of whom demanded Gensler's firing.
In an attempt to prove that cryptocurrencies are evil, Gensler failed to answer basic questions from members of Congress about whether Bitcoin is a commodity and digital Pokemon cards are securities. The chairman faced criticism from Andy Barr. The congressman said that Gensler had "kneecapped" the U.S. capital markets with bureaucratic regulation.
In past testimony, Gensler has compared the U.S. capital markets to gold medalists who must keep practicing. At yesterday's hearing, Barr recalled those words and compared him to Tonya Harding, the figure skater who hired a man to attack her rival Nancy Kerrigan in the run-up to the 1994 U.S. Figure Skating Championships.
This was followed by a comment from Republican Congressman Warren Davidson, who bluntly stated, "I wish the Biden administration would say: 'You're fired.'" Davidson accused Gensler of abusing his role as SEC chairman. The congressman identified two major problems that emerged during Gensler's tenure at the SEC: a problem with Gensler himself and a structural problem within the SEC. On his X account, he would later write that he introduced the SEC Stabilization Act to "fire" Gensler and restructure the SEC.
🚨 Gary Gensler’s tenure at the SEC highlights two key problems.— Warren Davidson 🇺🇸 (@WarrenDavidson) September 27, 2023
1) @GaryGensler problem
2) @SECGov structural problem
That’s why I introduced the SEC Stabilization Act to #FireGaryGensler and restructure the SEC. pic.twitter.com/Ud3giejKfZ
Another congressman, Tom Emmer, accused Gensler of not being an impartial regulator. Emmer raised the issue at the hearing, recalling his 18-year career at Goldman Sachs. A congressman asked him if he could remain impartial without favoring large financial intermediaries. Emmer emphasized that Gensler is a bureaucrat answerable to Congress.
Patrick McHenry asked Gensler whether Bitcoin is a security. He replied that Bitcoin did not pass the Howey test, i.e. Bitcoin is not a security. McHenry then suggested that Bitcoin might be a commodity. However, Gensler was unable to answer this question.
Ritchie Torres questioned whether the purchase of a Pokémon collectible card at a physical store is a securities transaction. Upon which Gensler responded that it was not. Torres further asked whether the purchase of a digital Pokémon collectible card on the blockchain was a securities transaction. Gensler was unable to answer the congressman's question.
I cross-examined @SECGov Chair Gary Gensler about the term 'investment contract', which is key to determining his authority over crypto.— Rep. Ritchie Torres (@RepRitchie) September 27, 2023
Gensler struggled to answer basic questions like whether an investment contract requires a contract. His evasions are deafening and damning. pic.twitter.com/EJcZEHiKGL
Meanwhile, the SEC is facing new challenges as the regulator prepares for a possible shutdown amid government funding problems. This would result in about 90% of the staff being laid off. What's interesting is that a possible shutdown of the regulator could automatically approve the latest Ethereum ETF filings.
Analyst Eric Balchunas claims that the SEC has fast-tracked Ethereum ETF filings and asked companies to update earlier filings by Friday evening. If this rumor turns out to be true, the Ethereum ETF launch could begin as early as Monday.
UPDATE: Hearing the SEC wants to accelerate the launch of Ether futures ETFs (bc they want it off their plate bf shutdown) so they've asked the filers to update their docs by Fri pm (no small task to jam into 48hrs, esp for indie issuers), so they can go eff Mon and trade Tue. https://t.co/gKyQFK12aM— Eric Balchunas (@EricBalchunas) September 28, 2023
Ethereum did not react to the news, and Gensler's speech before Congress had almost no effect on Bitcoin's price movement.