On April 18, the U.S. Securities and Exchange Commission (SEC) Chairperson Gary Gensler failed to mention the classification of Ether (ETH) as a security. In his 5 hours presentation, Gensler addressed the latest concern on recent SEC clampdowns.
The presentation discussed in detail the US crypto regulation. It highlighted the different approaches utilized to uphold compliance in the U.S. Additionally, Gensler responded to other critical questions regarding non-crypto activities.
What Did Gensler Presentation Entail?
He also reviewed proposals on climate change disclosure conditions and outlined the current trends in audit trails. The April 18 reporting was the first address Gensler made before the U.S. House Financial Services Committee in 2023.
Before Gensler took the stage, the U.S. House Financial Services Committee chairperson, Patrick McHenry, lamented that the lack of clarity in crypto regulation has turned to limit the expansion of crypto firms.
McHenry proposed that the SEC should redefine rules for digital assets. He argued that the enforcement approach implemented by the SEC was pulling down innovation level in the U.S.
In his opening remarks, McHenry was concerned that the SEC regulations were undermining the competitiveness of the U.S. crypto industry.
On the contrary, a committee member, Maxine Waters, praised the efforts made by Gensler and the team. Water underscored the achievements made by the SEC to minimize crypto crimes in the U.S.
He focused on Gensler’s presentation despite other more pressing concerns about the fallout of financial institutions, increase in debt defaults and housing challenges.
In addition, guided by the House Financial Services requirements at the end of the presentation, Gensler proceeded to the public questioning stage. The committee asked multiple questions concerning crypto assets, policies and regulations to wrap up Gensler’s interactive discussion.
Committee Remarks on Gensler Presentation
During this period, McHenry questioned the grouping of the Ether as a security. The classification of Ether created mixed feelings among the financial watchdogs.
As stated earlier by the finance director of SEC, Bill Hinman, he argued that Ether does not qualify as a security. Elsewhere the head of the commodity futures trading commission (CFTC), Rostin Behnam, referred to Ether as a commodity.
Speaking at a court proceeding New York Attorney General classified Ether as a security. This mix-up compelled McHenry to ask for a clear definition of the second-largest crypto asset by market capitalization.
Responding to McHenry’s question, Gensler stated that the law determines the grouping of Ether.
Nonetheless, the famous Congressman Bill Huizenga requested Gensler to provide the staff with an internal memo recommending a potential enforcement action against the Bahamian crypto exchange FTX and the outgoing chief executive Sam Bankman Fried.
Huizenga challenged Gensler to provide an overview of the actual FTX court proceedings without relying on the published reports. In this question, Gensler failed to provide full information concerning the FTX case due to issues with confidentiality.
Reviewing the questions asked on the Gensler’s April 18 presentation most of the policymakers questioned the regulatory clarity of crypto firms. Gensler argued that the new crypto regulations aimed to integrate more challenging registration requirements to uphold conformity and protect consumers from exploitation.
A Congressman from Ohio, Warren Davidson, interrupted Gensler with a question. He restated that the regulators lacked a precise crypto regulation framework.
In support of Davidson’s remarks, his counterpart Stephen Lynch argued that the SEC was required to formulate well-defined crypto regulations and a practical procedure for the regulators to enforce the law.