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The lawmakers also referred to the enforcement actions against crypto companies by the SEC.
The US lawmakers have put the chairman of the Securities and Exchange Commission (SEC) Gary Gensler on a hot seat over rushed rulemaking. For the first time since the Republicans took over the House of Representatives in January, Gensler testified before the House Financial Services Committee. The SEC head appeared to defend his regulatory agenda on crypto assets and the pace of rulemaking in specific areas like climate change risks.
Under Gensler’s administration, the SEC has proposed 46 rules associated with the $100 trillion capital market. In addition to the climate change risks, these proposed rules point to market structure and investment adviser conduct. The proposed market overhauls, including strict regulators for crypto companies, were the lawmakers’ focus while slamming the SEC head.
SEC Chair under Fire from US Lawmakers over Crypto Lawsuits and Rushed Rules
The House expressed its disagreement with the SEC’s lawsuit against crypto firms. Since all happened under Gensler’s tenure, the US lawmakers also claimed that the SEC chair refused to adhere to the request by Congress for documents. They stated that the incumbent SEC boss has proposed over X2 as many rules compared to his forerunners. The chairman of the House Financial Services Committee, Republican Congressman Patrick McHenry, said:
“This raises serious concerns that the rulemaking process is being rushed, undermining the quality of our securities laws and risking negative unintended consequences.”
In his defense, Gensler stated that the US capital markets are the most secure and strongest globally due to the rules. Therefore, there is a need for updated rules and regulations as investors are at risk with new innovations. On the other hand, McHency told Gensler that his approach is rather “driving innovation overseas and endangering American competitiveness”.
House Majority Whip Tom Emmer claimed that Gensler was pushing American firms into the hands of the (CCP) Chinese Communist Party, which is the US top adversary. He said there is a hostile environment for crypto, which the SEC chair is a part of.
Gensler maintained that “the SEC is the cop on the beat watching out for your constituents”.
Furthermore, the lawmakers also referred to the enforcement actions against crypto companies by the SEC.
“You’re punishing digital asset firms for allegedly not adhering to the law when they don’t know it will apply to them. It’s nonsensical…There’s a lack of clarity here in the marketplace. Can you at least agree to that?” noted the Republican Congressman.
The committee chairman blamed the Commission for rolling out over 50 enforcement actions against crypto firms under Gensler’s tenure. In his statement, he explained that the financial watchdog has no responsibility suing the establishments over failure to register with the Commission. According to McHenry, the law is unclear if certain digital assets are securities or commodities. Meanwhile, the Commodity Futures Trading Commission (CFTC) and the SEC have often battled over the distribution of authority on certain cryptocurrencies.