SEC Gensler’s crypto crackdown under scrutiny as he testifies before Congress

US Securities and Exchange Commission (SEC) Chairman Gary Gensler will testify twice this week before Congress.

Gensler will appear before the House Financial Services Committee on Sept. 24 and was scheduled to meet the Senate Banking Committee on Sept. 25, but the second hearing has now been postponed. Eleanor Terrett from Fox Business said, “Capitol Hill staffers tell me they don’t yet know the reason for the change.”

These hearings occur amid ongoing tensions between the SEC and the crypto industry. Data from Paradigm reveals that the SEC has taken 171 enforcement actions against the crypto space, with a marked increase since Gensler’s confirmation in April 2021.

Brendan Malone, Paradigm’s Policy Manager, noted:

“Since Chair Gensler took office on April 17, 2021, the SEC has increasingly gone to court to establish its policy positions—confirming what the industry has long known regarding regulation by enforcement.”

No mention of crypto in joint testimony

On Sept. 23, Gensler announced that he and four other commissioners—Caroline A. Crenshaw, Hester Peirce, James Lizarraga, and Mark Uyeda—would testify before the House Financial Services Committee in a hearing titled “Oversight of the Securities and Exchange Commission.”

The joint testimony emphasized the SEC’s role in safeguarding the $100 trillion US capital markets and maintaining dominance over the US dollar. It also highlighted the SEC’s $2.15 billion budget and noted that its enforcement division took 784 actions in FY 2023, resulting in $4.9 billion in penalties and disgorgement.

The commissioners wrote regarding enforcement:

“[The] monetary remedies [are] designed to remove wrongdoer’s ill-gotten gains and deter future violations. the Commission’s enforcement actions protect investors by obtaining remedial injunctions in district court and, similarly, remedial suspensions and bars in administrative proceedings.”

Although the commissioners did not directly address the crypto industry, a hearing memo reviewed by CryptoSlate indicated that crypto would be a topic of discussion at the event.

The memo pointed out that under Gensler’s leadership, the SEC prioritized the digital asset space and continued pushing for broader authority over the ecosystem while pursuing an aggressive enforcement agenda.

However, the memo noted that the SEC has not clearly defined digital assets as securities. This lack of clarity has left the digital asset space in regulatory uncertainty, threatening its future in the US.

[24/11/24 14:59: Updated to include postponement of the second committee hearing.]

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