Answering questions during a House Committee hearing on financial services on Oct. 5,Gary stressed that the ban on cryptocurrencies is not part of the SEC’s mandate, stating, “It is. It is left to Congress.”
“The question is how do we bring this into the area of consumer protection for investors that we have, and how do we also work with banking regulators and others,” said Gensler. How do we ensure that the Treasury Department has anti-money laundering measures? “Tax compliance,” said Gensler.
“Many of these tokens pass the test of being an investment contract, a note or a security,” he added, emphasizing the need to include cryptocurrencies “within the framework of the SEC’s investor protection.”
Gensler also noted that “financial stability issues that can improve stablecoins” are a priority for the agency.
Targeting the SEC’s actions and attitudes towards digital assets under Gensler’s leadership during the hearing, Representative Patrick McHenry accused the SEC chief of failing to act according to “longstanding practice,” commenting on processes and procedures.
“Some of your comments have raised questions in the marketplace and made things less clear. You’ve made comments that don’t seem appropriate to market movements, you’ve circumvented the rule-making by making a statement without due process, and you’ve essentially found a rough understanding of American investors. “
Gensler responded that the SEC follows the Administrative Procedure Act.
In 2019, while teaching at MIT, McHenry also cited Gensler’s comments to the commission, in which he criticized previous SEC decisions regarding the classification of Bitcoin and Ether as commodities.
When asked about his current stance on the matter, Gensler said, “I wouldn’t get involved with a single token, but I think the securities laws are pretty clear – when you’re collecting money.” […] and the investing audience […] Have a reasonable expectation of return due to the efforts of others, in accordance with securities laws. “
Related: US lawmakers propose a safe haven for digital tokens in a new law
The hearing took place the same day McHenry proposed Clarity for the Digital Token Act 2021, based on a safe harbor proposal by SEC Commissioner Hester Peirce in February 2020.
During the hearing, McHenry urged Gensler to take the time to consider Peirce’s proposal. While Gensler dodged to answer whether he had specifically considered Peirce’s suggestion:
“Commissioner Peirce and I have shared your thoughts on a possible safe haven. I think the challenge for the American public is that if we don’t monitor this and protect investors, people will be hurt. “