Patrick McHenry, chairman of the U.S. House Financial Services Committee, directly criticized the SEC and its leadership on digital assets during an oversight hearing.
In his opening remarks at an April 18 hearing on SEC oversight, Representative McHenry referred to the Commission’s “punishment” of digital asset firms through enforcement regulation without a clear path to compliance. Members of Congress have again called on U.S. lawmakers to pass legislation providing “clear rules of the road” for cryptocurrencies. In addition, he urged SEC Chairman Gary Gensler to discuss Ether, Commodities that qualify as securities under the purview of the SEC or under the purview of the Commodity Futures Trading Commission.
McHenry spoke repeatedly about Gensler's response, but did not include specifics, citing SEC chairman's willingness to label Bitcoin, as a commodity and hinted at private discussions on ETH ahead of the hearing.
"Obviously, an asset cannot be both a commodity and a security," McHenry said. "I ask you, sit in your chair now, and assess under existing law, is ether a commodity or a security?"
He added: "You've prejudged this: You've taken 50 enforcement actions. When you file a lawsuit, when people get Wells notifications, we'll find out as we go, in your view, in your agency's view. Come on, what are securities." Instead of pressing Gensler on ETH, Representative Maxine Waters, the top member of the House committee, focused her questions on the SEC’s enforcement capabilities. According to the chairman of the SEC, the commission has the ability, power and will to keep cryptocurrency companies in compliance.
Many in and outside the crypto space have criticized the SEC under Gensler for taking enforcement action against companies involved in digital assets and blockchain technology. On April 17, the SEC charged crypto-asset trading platform Bittrex and its co-founder William Shihara with offering unregistered securities, and a March Wells notice to Coinbase suggested major exchanges could be next. Gensler claimed that the cryptocurrency market is “rife with non-compliance,” and that in many cases, companies did so on purpose. His written testimony said that SEC compliance extends to decentralized finance platforms suggesting that the commission is proposing to change its rules to include DeFi in exchanges within its purview.
The April 18 hearing was Gensler’s first direct address to a House committee since October 2021 before the collapse of FTX, Celsius, BlockFi and crypto-friendly banks including Signature, Silicon Valley Bank and Silvergate. The Financial Services Committee will also meet to discuss stablecoin regulation at an April 19 hearing.
