Key facts:
Tom Emmer calls Gensler “the most destructive chairman the SEC has ever had.”
Patrick McHenry criticises the lack of clarity in regulations, and calls for precise definitions.
As expected, the five commissioners of the US Securities and Exchange Commission (SEC) appeared before the House Financial Services Committee today. It was a hearing in which legislators did not skimp on criticism and confrontations with Gary Gensler, the current president of the regulatory agency.
During his turn, Congressman Tom Emmer He called Gensler “the most destructive and lawless SEC chairman in history.” This is due to what he described as poor management of the cryptocurrency industry in the United States, which he called “regulation by harassment.”
Emmer He stated At the head of the SEC, Gensler has created such a hostile environment that many of the sector’s companies have been forced to seek friendlier environments abroad.
The congressman, representing Minnesota, noted that since Gensler took office, The SEC has implemented a total of 55 rules related to cryptocurrencies. However, in their view, these regulations have not made it easier for the industry to comply with legal requirements, but instead have stifled the industry’s growth.
Emmer’s criticism comes in the context of growing concern within the cryptocurrency sector, where many actors criticize and accuse the SEC of creating a climate of uncertainty that hinders innovation and competitiveness in a dynamic global market.
The confrontation comes after an avalanche of lawsuits against various companies in the bitcoin (BTC) and other cryptocurrency ecosystem. For example, popular exchanges such as Binance, Coinbase, Kraken and others were challenged by regulators as part of an aggressive crackdown that brought the relationship between the cryptocurrency industry and one of its main regulators to a head.
The SEC chairman himself has had a harsh attitude towards the cryptocurrency sector, even going so far as to classify it as the worst-performing sector in the US stock market.
So under his leadership, the U.S. agency has come to argue that it has the authority — thanks to decades-old securities laws — to oversee an industry that is not even 20 years old. But lawmakers say Gensler has done nothing but confuse and harm the emerging cryptocurrency industry.
Gensler uses confusing terminology, Patrick McHenry said
Meanwhile, House Financial Services Committee Chairman Patrick McHenry also questioned Gensler today for using “inconsistent terminology that has created confusion in the sector.”
McHenry and other committee members expressed concern about the lack of clarity in digital asset regulation and questioned the use of enforcement actions instead of offering clear guidance to cryptocurrency companies and other industry players.
“Does the SEC differentiate between crypto tokens and tokenized securities?” McHenry asked, highlighting the ambiguity in the language used to describe these assets.
As detailed in CriptoNoticias’ glossary of terms, a token is a digital currency built with cryptography that depends on the blockchain of another currency to exist, so it is governed by its rules. While a tokenized value or tokenization refers to the process by which a physical asset is equivalent to a token or a certain amount of tokens within a blockchain. In this way, a car or a service, for example, comes to be represented and traded digitally.
However, the SEC chairman demonstrated that he does not stop at definitions, but, on the contrary, Terminology is less relevant than economic reality assets, and he made that clear. “It really comes down to a Supreme Court test, which is the law of the land, called the Howey test,” he said, referring to the mechanism the agency uses to determine whether a transaction qualifies as an investment contract. He said “labels matter less than economics.”
To determine whether any investment is a security, SEC uses Howey testa parameter derived from the name of a court case that was argued in the United States in 1946.
The Howey test identifies four key characteristics for defining a security. These include that it is offered in exchange for money, that there is an expectation of profit, that the investment is focused on a common enterprise, and that the profits depend on the efforts of a promoter or third party.
In any case, Exchanges, the Bitcoin industry differs from the SEC’s approaches. They claim that being The Howey test, an old tool and one used in traditional finance, should not be applied to the world of cryptocurrencies.
“Today’s hearing is about oversight of the Securities and Exchange Commission. Based on recent actions taken by Chairman Gensler, it’s easy to forget that the SEC is independent and led by a bipartisan commission. It’s not run solely by the chairman or the head of a single agency. That’s why it’s so important for Congress and the American people to hear the diverse viewpoints of the full Commission.”
Patrick McHenry, Acting Speaker of the House of Representatives of Congress.
However, at today’s hearing, McHenry was not satisfied with Gensler’s responses. Instead, he criticized the SEC’s tendency to rely on broad enforcement actions and said that “the laws are clear,” questioning the agency’s unwillingness to clarify its regulatory stance. He also said that The agency’s vague language could be designed to prevent proper regulationeven calling the SEC a “rogue agency” during his statement.
McHenry’s concerns were echoed by Commissioner Hester Peirce, who stressed that the SEC’s legal approach has further complicated regulatory clarity. She said: “We have taken a legally vague view to hide the lack of regulatory clarity.” She went on to say that this ambiguity has allowed the agency to suggest that a token itself, rather than its sale in a contract, should be considered a security.
The officials later agreed that A clear legal definition by Congress could facilitate a regulatory framework for digital assets. “We certainly have the authority to provide guidance,” Peirce concluded, “but a legal definition would help.”
