On Thursday, the chairman of the Securities and Exchange Commission (SEC), Gary Gensler had to face a rather fierce grilling over the role of the regulatory body in developing rules for crypto.
This includes the view of the chairman that almost all of the cryptocurrencies that are trading in the market today are actually unregistered securities.
Criticism of the SEC
The Senate Banking Committee conducted an oversight hearing of the agency on Thursday during which Republican Senator Pat Toomeny said that the SEC was not doing a good enough job.
The SEC’s agenda has seen a growing number of Republicans becoming rather frustrated with the agency.
Some lawmakers have gone as far as claiming that Gensler, who had been appointed the chair last year, has overstepped his authority.
The Republican Senator said that some of the actions as well as inactions of the SEC had raised concerns about how well it is fulfilling its mission.
This mission is to ensure investor protection by maintaining orderly, fair and efficient markets and facilitating capital formation.
Toomey also talked about how the SEC has chosen to enforcement securities law in terms of how it would apply to cryptocurrencies.
He suggested that the securities agency has not been as transparent as needed. He stated that the biggest issue was that the SEC was not disclosing the framework it is using.
The senator said that Gary Gensler claims that almost all crypto tokens classify as securities, but plenty of people would disagree with that conclusion.
He said that Bitcoin has been exempted from this definition, but the senator said that Congress may have to step in to provide crypto entrepreneurs and investors with a clear framework.
In the meantime, he stated that it was the SEC’s job to offer some clarity.
Toomey claimed that this clarity would have come in handy recently by preventing the disastrous collapse of a number of crypto platforms and companies earlier in the year.
This resulted in losses worth billions of dollars. The senator asserted that the SEC had not done enough for offering protection to investors when companies like Voyager and Celsius had gone bankrupt.
Both were crypto lending platforms that had been offering customers huge returns on their crypto deposits.
Gensler also responded to the senator and said that a number of companies have not communicated with the agency about selling and listing tokens and they need to step forward and do so.
Gensler also asserted that when it comes to crypto regulation, there needs to be ‘one cop on the beat’.
Reports indicated that the SEC had launched an investigation in July into Coinbase, the biggest crypto exchange in the US, in order to determine if unregistered securities were listed on its platform.
Previously, Gensler had asserted and he repeated it again that the SEC considers a number of cryptocurrencies as securities.
The SEC chief has declared bitcoin to be an exception but has not mentioned any other coin specifically, including Ethereum.