Regulating cryptocurrency has been a subject of debate since the start of the year, with the SEC adamant to enforce regulations. Chair Gary Gensler, has reiterated on numerous occasions that regulating the crypto industry is non-negotiable. However, Gensler has reportedly confirmed that neither he nor the agency has the intention to ban digital assets.
During a House Committee meeting on Financial Services on Tuesday, members present questioned Gensler’s approach towards the crypto space. The SEC boss emphasized that banning crypto doesn’t fall within the powers of the regulator and that it was up to Congress. Gensler stated that many of the tokens out there bear the same characteristics as an investment contract or security, stressing the need to bring digital assets “within the investor protection remit of the SEC.” He also discussed the financial stability problems that stablecoins could bring while noting that it remains a priority for the body.
Reps. Member Takes a Swipe at Gensler’s Actions
A member of the Representatives Patrick McHenry took a swipe at the methods employed by Gary Gensler and the SEC regarding cryptocurrency during the reps meeting. McHenry accused the SEC head of failure to follow standard practices, which the commission has long-held. According to the representative, some of the comments made by Gensler have made things less clear and raised questions in the crypto world. He accused Gensler of making remarks that showed total disregard of rulemaking.
Gensler responded to McHenry’s comments by stating that the SEC acts in accordance with the administrative procedures act. McHenry also repeated Gensler’s remarks he made during a committee in 2019, in which he bashed past rulings from the SEC that classified BTC and ETH as commodities. The Chair went further to say that he isn’t against any token, emphasizing that any coin that raises money and allows for public investments with the intent of generating profits based on others’ efforts is classified as a security.
During the same meeting, McHenry proposed the Clarity for Digital Tokens Act of 2021, which stemmed from the safe harbor bill proposed by SEC Commissioner Hester Pierce, widely known as SEC’s Cryptomom, in early February 2020.
The “Cryptomom” proposed a safe harbor for the registration of token projects. Although the Commissioner presented the idea in 2019, she formally proposed it to the house in February. According to Pierce, her regulatory vision would create a safe period of three years for project developers to work on their projects without being perturbed by the SEC’s legal actions. However, the developers would have to prove that they are actually building an open-source network.
McHenry asked Gensler if he had taken time to look at Hester Pierce’s proposal, but the latter evaded it. Instead, he talked about bringing protection to investors to prevent them from getting hurt.