SEC Chair Gary Gensler Gets Rocked By Congress
The anti-crypto life is getting harder
America’s top financial cop has not been shy about his anti-crypto views.
In fact, I’ve covered Securities and Exchange Commissioner Gary Gensler long enough to know he might very well outright hate the idea of cryptocurrency at this point.
And that hate almost certainly reached a new boiling point Tuesday as he approached the end of an hours-long grilling in front of the House Financial Services Committee, in which Chair Gensler got accused of being — in no particular order — a hypocrite, a liar, and a mouthpiece for Sen. Elizabeth Warren.
It was ugly.
But, if you’re a crypto advocate and subscribe to the idea that Gensler’s SEC is purposefully not providing regulatory clarity in order to continue using confusion to their benefit in the cases they’ve been bringing against crypto companies, well…. then it was an amazing sight to see.
The hearing had been scheduled for weeks and was supposed to focus on congressional oversight into the SEC’s policing of all things finance. Somehow, when it came to lines of questioning, that became almost 75% crypto, 15% the SEC’s right to enforce climate change actions … and 10% “what is your favorite movie?” Yes, for some reason one congressman brought up the Gene Wilder film Blazing Saddles and I’m still confused.
But, as expected, the true fireworks began when House Majority Whip and Co-Chair of the Blockchain Caucus Tom Emmer (R-MN) took the mic. Congressman Emmer has become one of the most outspoken advocates for crypto and the need for regulatory clarity. By default, that also now makes him one of Gensler’s biggest critics.
As I’ve written about before, there is a huge risk for America if this country decides to push every single crypto company offshore. Even Coinbase CEO Brian Armstrong came out yesterday and said anything is on the table when it comes to possibly relocating. Coinbase might also have to sue the SEC to survive the regulatory onslaught of cases being brought against exchanges for selling “unregistered securities.”
And that’s where the anger comes in. Currently, nobody knows which cryptocurrencies may or may not be securities. Except for Bitcoin. And maybe at one point Ether. But in Tuesday’s hearing the whole thing got kicked off with frustration over Gensler’s inability to answer a simple question from Chair McHenry about whether Ether is, in fact, a security.
It was awkward. But it’s more awkward for exchanges like Coinbase and others, who have faced potential lawsuits because they are selling things that one day the SEC might say are actually securities. Selling agreed upon securities, like stocks for example, require exchanges to register with the SEC. But if the SEC hasn’t explicitly said, “CRYPTO X IS A SECURITY!” Well, then you can see the frustration if they all of a sudden get sued to the tune of millions of dollars.
And so when Congressman Emmer got the mic, he let Gensler have it. He poured out all the frustrations he’s no doubt heard in meeting with crypto constituents and lobbyists.
“You’ve been an incompetent cop on the beat, doing nothing to protect everyday Americans and pushing American firms into the hands of the [Chinese Communist Party.]"
There is now a somewhat idiotic bill being floated by a congressman from Ohio to remove the idea of a Chair of the SEC altogether. There is a good chance that bill goes absolutely nowhere, but hey, politics be politics.
More importantly, the line over frustrations stemming from America’s idiotic confusion over what to do with regulating crypto is finally getting drawn. Republicans stood in a united front, and even the House Financial Services press release made a specific note of that, entitled: “Committee Republicans Blast Chair Gensler’s Misrepresentation of Non-Existent Digital Asset Trading Platform Registration Process.”
“Republicans are slamming the Commission’s approach to digital asset regulation and attempts to force digital asset trading platforms to “come in and register” under the ill-fitting national securities exchange (NSE) framework. Republicans are urging Chair Gensler to work with Congress to develop clear rules of the road for digital assets that foster innovation and protect investors,” the release read.
Regardless of your political affiliation, or the fact that Gensler was appointed by Biden, the fact that two of America’s financial regulatory agencies — the SEC and the Commodity Futures Trading Commission (CFTC) — can’t even agree on whether cryptos are commodities or securities, and thus, who has the jurisdiction to regulate them, makes America a global laughing stock.
As the confusion festers, companies are continuing to move offshore. Jobs are moving offshore, and America is losing its chance to lead.
By now, it should be incredibly clear: Bitcoin cannot be turned off. The freedom of programable money cannot be put back in the box no matter how hard the government wished it could.
Perhaps finally, if even for a moment, America’s top financial cop may have realized there is a limit to how long he can use confusion to his advantage.