Amid a major regulatory onslaught against the cryptocurrency industry, the Chair of the United States Securities and Exchange Commission (SEC), Gary Gensler, is going to testify before the US House of Representatives Financial Services Committee this week.
Indeed, Ron Hammond, Director of Government Relations at a non-profit cryptocurrency advocating group, the Blockchain Association, said this was a “huge week for crypto policy,” as Gensler’s appearance will be the first in over a year and a half, according to a Twitter thread he posted on April 17.
Much happening since
Specifically, the SEC chief last testified before the Financial Committee on October 5, 2021, although he did have several appearances before other Committees. The current testimony will relate to the issue of oversight from the agency that many have accused of relying on enforcement rather than proper regulation.
As Hammond clarified:
“A LOT has happened since October 2021 for the crypto ecosystem. Terra (LUNA), FTX, and Celsius, just to name a few from 2022. The question which will come naturally first to many on the Committee will be ‘where were the regulators’ since many of these were caught after the fact.”
Furthermore, he pointed out that “at the same time, the SEC has been proactive in other areas in the crypto space, but from an enforcement perspective,” singling out Wells Notices issued “to several firms, including Coinbase,” threatening to sue, settlement with Kraken over its staking services, and Paxos being forced to shut down BUSD and lending products.
Earlier, Gensler received a stern letter from the Financial Services Committee Chair, Patrick McHenry, and the Chair of the Oversight and Investigations Subcommittee, Bill Huizenga, regarding the request for records relating to the arrest of former crypto exchange FTX CEO Sam Bankman-Fried.
Notably, this hearing arrives as the finance watchdog is waging a widely publicized courtroom battle against the blockchain company Ripple, which it accuses of illegally selling the XRP token, the outcome of which could have a tremendous impact on not just the XRP, but the entire crypto market.
Bipartisan approach
Interestingly, Hammond believes that, unlike typical oversight hearings, this one will be bipartisan, as both the Republican and Democratic parties have been critical of Gensler’s activities against the crypto industry. He also predicts it will be “both substantive and media content-heavy,” as “many believe the SEC has been overreaching and in contrast to 2022/23 bipartisan proposed legislation.”
Meanwhile, another bipartisan effort in the crypto space, “the McHenry/Waters stablecoin legislation, is back in the mix,” as Congress has revived the 2022 legislative draft, “and it seems poised to be moving forward in the House very soon.” As Hammond stressed, the first draft came out this weekend, and a legislative hearing will take place on April 19.
