The Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, found himself in a difficult situation during Wednesday’s Congressional debate. Accusations of a lack of transparency in relations with FTX and its former CEO, Sam Bankman-Fried, were a flashpoint of the discussion. Are cryptocurrencies safe investments, or rather speculative tools ambiguously regulated by law?
During Wednesday’s hearing before the Financial Services Committee in the House of Representatives, Gensler found himself under fire from questions from both sides of the political spectrum. Although he had previously submitted a written statement, he had to face more probing questions live.
To start, Democrat Maxine Waters decided to pose several questions to the chairman. Despite her critical approach to cryptocurrencies, she praised Gensler while also asking questions whose answers were already publicly available.
Tensions rose when Patrick McHenry, chairman of the Financial Services Committee, raised the issue of the “lack of responsiveness” from the SEC in replies to Congress. This primarily concerned the SEC’s relations with Sam Bankman-Fried and the problematic cryptocurrency exchange FTX. McHenry made it clear that Gensler “is not above the law” and threatened to issue a summons for clarification if greater transparency isn’t provided.
One of the more unexpected moments of the hearing was an exchange with Richie Torres. The Democrat asked Gensler whether purchasing a Pokemon card could be considered a hedging transaction. Following the SEC chairman’s answer, Torres delved deeper, asking about the “tokenized” version of a Pokemon card purchased on a digital exchange.
The final part of the hearing was marked by criticism from Congressman Tom Emmer. Emmer quoted Gensler’s previous comments about banks’ concerns with transferring deposits to cryptocurrency exchanges and wallets. He pointed out that a “regulation by harassment” style might stifle innovation and work against Americans.
The Congressional debate highlighted the strained relations between the regulator and the cryptocurrency world. These discussions underscore the need for clear guidelines and regulations to help shape the future of the cryptocurrency market.
Photo by Louis Velazquez on Unsplash
