Key facts: Tom Emmer calls Gensler «the most destructive chairman the SEC has ever had.» Patrick McHenry criticizes the lack of clarity in regulations, and calls for precise definitions. As expected, today the 5 commissioners of the United States Securities and Exchange Commission (SEC) appeared before the House Financial Services Committee. It was a hearing in which legislators did not skimp on criticism and confrontations with Gary Gensler, current chairman 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 said that at the head of the SEC, Gensler has created such a hostile environment that many of the companies in the sector have been forced to look for friendlier spaces abroad. The congressman, representing Minnesota, highlighted that since Gensler took office, The SEC has implemented a total of 55 rules related to cryptocurrencies. However, in his view, these regulations have not made it easier for the industry to comply with legal requirements, but on the contrary, have stifled the industry's growth. Emmer's criticism comes in a 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) ecosystem and other cryptocurrencies. 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 fever pitch. In itself, the SEC chairman has maintained a harsh attitude towards the cryptocurrency sector and even went so far as to classify it as the worst-performing sector of the US stock market. So under his leadership, the US agency has come to argue that it has the authority – thanks to decades-old securities laws – and with it, it oversees an industry that is not even 20 years old. However, for legislators, 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 regulating digital assets and questioned the use of enforcement actions instead of offering clear guidance to cryptocurrency companies and other industry players.
Patrick McHenry expressed concern about the terms that have been used to regulate the cryptocurrency industry. YouTube/Forbes. “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 BitcoinDynamic’ 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, begins to be represented and traded digitally. However, the SEC president showed 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 agency’s mechanism for determining whether a transaction qualifies as an investment contract. He said “labels matter less than economics.” To determine whether an investment is a security, SEC uses Howey testa parameter that derives from the name of a court case that was debated in the United States in 1946. The Howey test identifies four fundamental characteristics to define a security. Among them, that it is offered in exchange for money, that there are expectations of profits, that the investment is focused on a common company and that the profits depend on the efforts of a promoter or a third party. In any case, Exchanges, the Bitcoin industry differs from the SEC's approaches. They assure that by being The Howey test, an old tool and one used in traditional finance, should not be applied into the world of cryptocurrencies. “Today’s hearing is about oversight of the Securities and Exchange Commission. Based on the 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.
The five SEC commissioners appeared before the House Finance Committee today. Source: X/FinancialCmte. 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 her 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.”