While answering questions at a House Financial Services Committee hearing on October 5, Gensler stressed that the crypto ban was outside the SEC’s mandate, saying, “It would be up to Congress. “.
“It’s about how to fit this area into the investor and consumer protection that we have and also working with bank regulators and others – how to make sure the Treasury Department has it in the fight against it.” money laundering and tax compliance, ”Gensler said.
“Many of these tokens pass the test of being an investment contract, or a note, or a security,” he added, stressing the need to integrate crypto “within the mission of protecting SEC investors ”.
Gensler also noted “financial stability issues that stablecoins might raise” as a priority for the agency.
Representative Patrick McHenry targeted the actions and stance taken by the SEC regarding digital assets under Gensler’s leadership during the hearing, accusing the SEC chief of failing to act in accordance with “long-standing practice. of the agency of noticing comments on rules and procedures ”.
“Some of those comments you made raised questions in the market and made it less than clear. You’ve made seemingly off-the-cuff remarks that get the markets moving, you’ve bypassed rule-making by making a non-due process statement, and you’ve essentially trampled on US investors.
Gensler replied that the SEC follows the law on administrative procedures.
McHenry also cited comments Gensler made to the committee in 2019 while teaching at MIT, in which he criticized previous SEC decisions classifying Bitcoin and Ether as commodities.
Asked about his current take on the matter, Gensler said, “I’m not going to go into just one token, but I think the securities laws are pretty clear – if you’re fundraising. […] and the investing public […] have a reasonable expectation of profit based on the efforts of others, which is consistent with securities law.
A report: US lawmaker proposes safe harbor for digital tokens in new bill
The hearing took place the same day that McHenry proposed the Digital Token Clarity Act, 2021, which draws heavily on the Safe Harbor proposal presented by SEC Pro-Crypto Commissioner Hester Peirce in February 2020.
During the hearing, McHenry asked Gensler if he had taken the time to consider Peirce’s proposal. While Gensler avoided responding if he had specifically considered Peirce’s proposal:
“Commissioner Peirce and I discussed her thoughts on a potential refuge. I think the challenge for the American public is that if we don’t monitor this and provide investor protection, people are going to be hurt. “