Chair of the U.S. Securities and Exchange Commission, Gary Gensler, maintained a confrontational attitude against people who advocate for cryptos during his recent hearing before a Congressional committee. He declined to respond to the most important industry questions while highlighting the carelessness exhibited by digital asset companies with regard to client holdings.
Speaking before the Financial Services House Committee, Gensler reiterated his consistent disapproval of how crypto companies handle customer assets, asserting that combining these assets has yielded unfavorable outcomes. Additionally, Gensler disclosed that the commission is yet to finalize its approach to a judge’s decision, which compelled the commission to reconsider its position on a Bitcoin exchange-traded fund (ETF). Gensler added that the commission is actively contemplating its options in response to this ruling, maintaining a deep respect for the judicial process.
Judge Neomi Rao of the D.C. Circuit Court of Appeals ordered the SEC to review its position on Bitcoin ETF applications in August, branding the commission’s prior rejection in the Grayscale Investments case as irrational and arbitrary. Much of the discussion during the hearing revolved around issues unrelated to crypto, such as concerns about the commission’s focus on matters like climate change and the impending government shutdown.
As with previous hearings, partisan divisions were evident, with Democrats commending Gensler while Republicans accused him of detrimentally impacting small businesses and consumers through his actions. Committee chair Representative Patrick McHenry criticized the SEC’s repeated losses in court as well as its perceived campaign against the digital asset sector, which he argued was causing confusion and long-term damage to the industry.
Gensler refrained from answering Rep. Stephen Lynch’s inquiry about the SEC’s current legal battle with Ripple, stating that the matter is still pending before the courts. Lynch compared the SEC’s accusations against Binance to the events leading up to the FTX collapse, arguing that industry regulation may unintentionally shield businesses from liability in the event of a collapse.
In response, Gensler asserted that any legislative action must address the issue of commingled assets in the crypto sector, stating that Congress would need to separate these conflicts if it were to intervene.
Meanwhile, the crypto industry’s interactions with the SEC may face delays in the near future, as Gensler hinted that the SEC is preparing for a potential government shutdown next week. He stated that this action could reduce the agency’s workforce by over 90%.
Enterprises such as Bit Digital Inc. (NASDAQ: BTBT) will be following events in Congress to see how the SEC tries to steer the regulation-making process so that the crypto industry can finally have a stable regulatory framework that can inform current and future operations.
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