SEC Chair Gensler affirmed Bitcoin as a commodity during an oversight hearing but didn’t classify Ethereum, leaving its status uncertain.
During an oversight hearing, Patrick McHenry, the United States House Financial Services Committee chair, wasted no time directing criticism toward the Securities and Exchange Commission and its leadership regarding their handling of digital assets.
McHenry spoke on SEC oversight, discussing enforcement measures on digital asset firms in an April 18 hearing. He pointed out the lack of a clear path to compliance for these firms being punished in his critique of the commission. He also reiterated his earlier proposals for the United States to establish a regulatory framework for digital assets.
Advocates are urging lawmakers to enact legislative measures to establish specific cryptocurrency regulations. Gary Gensler urged for the conclusive response on Ethereum’s classification as a security or commodity under SEC or CFTC jurisdiction.
McHenry criticized Gensler’s lack of detail in his responses multiple times during the hearing. He highlighted that the SEC chair was willing to classify Bitcoin as a commodity and alluded to confidential discussions regarding Ethereum before the hearing.
McHenry stated that an asset couldn’t be a commodity or a security. Therefore, the current laws raise the question of whether to classify Ether as a commodity or a security.
“You’ve made a decision: you’ve taken 50 enforcement actions.” We’re learning as we go, as you file suit, as people get Wells notices, about what constitutes security in your mind, and in your agency’s minds.”
📺 Tune in at 10:00am 👇https://t.co/qNdJ4wDkw5
— Patrick McHenry (@PatrickMcHenry) April 18, 2023
Representative Maxine Waters, who holds a high-ranking position in the House committee, directed her inquiries toward the SEC’s enforcement capabilities rather than pressing Gensler on Ethereum during the questioning.
The SEC chair confirms that the agency has resources, jurisdiction, and determination to ensure crypto companies comply with regulations.
Gensler SEC Faces Criticism For Cryptocurrency Crackdown
The SEC, led by Gensler, has faced criticism for enforcing digital assets and blockchain tech. Criticism comes from inside and outside the cryptocurrency community.
The SEC charged Bittrex, a cryptocurrency trading platform, and its co-founder William Shihara with offering unregistered securities on April 17.
In March, Coinbase, a leading exchange, received a Wells notice indicating that it, too, may face similar charges. These actions by the SEC are part of an increased focus on regulating the cryptocurrency industry.
Gensler claimed the crypto market was “rife with noncompliance.” In many cases, firms willfully do so. His written testimony said compliance with the SEC extended to decentralized finance platforms.
This indicates the commission is proposing changing its rules to include DeFi in exchanges under its purview. On April 18, Gensler spoke to the House committee for the first time since October 2021.
Related Reading | Shapella Upgrade Unlocks $2 Billion Worth Of Ethereum Validator Rewards
This was before the collapse of various crypto-related entities, such as FTX, Celsius, BlockFi, and banks friendly to cryptos, such as Signature, Silicon Valley Bank, and Silvergate. On April 19, the Financial Services Committee is scheduled to discuss stablecoin regulation during a hearing.