U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler defended the agency's record of regulation, enforcement, and its rulemaking authority during a contentious hearing before the Senate Committee on Banking, Housing, and Urban Affairs this Tuesday, Sept. 12.
The hearing highlighted the tension between the SEC's extensive rulemaking under Gensler's tenure and those who believe it exceeds the SEC's congressional mandate.
Gensler, disparagingly labeled an “unelected bureaucrat” by Sen. Steve Daines of Montana, was tasked with justifying the SEC's approach to cryptocurrency regulation and its broader rulemaking authority amidst numerous criticisms. The chair replied the SEC has been appropriately following facts and laws in its oversight of cryptocurrencies. This comes in the wake of a slew of enforcement actions against the cryptocurrency space and its biggest participants, including Binance, Coinbase, and more.
When queried about a recent court decision that criticized the SEC for blocking a spot Bitcoin (BTC) exchange-traded fund, Gensler stated that the agency is still reviewing the ruling and multiple similar filings.
Limits on authority
Gensler's extensive rulemaking activities drew criticism from multiple Republicans who argued it exceeded the SEC's congressional mandate and risked detrimental consequences for businesses and investors. Nonetheless, Gensler stood firm, citing precedents in defending the scope of rulemaking and asserting it aligns with the actions of previous chairs. He emphasized the agency values input from all types of investors on proposed rules.
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Sen. Elizabeth Warren (D-MA), criticized Gensler for not implementing stronger private equity fund regulation quickly enough. Gensler pointed to a recently finalized rule requiring additional disclosures as an indication of progress.
Gensler's stance on cryptocurrency regulation has consistently emphasized the need for greater oversight. Despite the presence of good faith actors within the industry, he has persistently argued that the crypto environment is “rife with fraud” and lacks comprehensive investor protections
He has repeatedly argued that the crypto space is “rife with fraud,” lacks comprehensive protections for investors, and can be effectively regulated under current law. “I've been around finance for around 44 years now,” Gensler said today in regarding the crypto industry, “And I've never seen a field that's so rife with misconduct… It's daunting.”
