SEC Chair Gensler Discusses Cryptocurrency Oversight and Spot Bitcoin ETF During Congressional Testimony

During his testimony before Congress on Wednesday, Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), maintained his critical view of the cryptocurrency sector.

In spite of political divisions and ongoing legal challenges, Gensler refrained from revealing the SEC’s forthcoming actions regarding spot bitcoin exchange-traded funds (ETFs) after a recent legal setback.

Gensler Accuses Crypto Companies

Chairman Gary Gensler upheld his confrontational position against what he referred to as crypto “hucksters.” In his statements to the House Financial Services Committee, Gensler charged digital asset firms with being irresponsible with customer funds, especially regarding the mixing of assets, which he characterized as a formula for disaster.

Gensler also referenced the recent court decision that prompted the SEC to reassess its position on spot Bitcoin ETFs. In August, a judge from the D.C. Circuit Court of Appeals encouraged the SEC to revisit its ruling in the Grayscale Investments case, asserting that the agency’s rejection was “arbitrary and capricious.”

Nonetheless, Gensler’s testimony left the industry uncertain, with no definitive information about the SEC’s next steps or the timeline for its decision.

While the cryptocurrency sector was a key topic of discussion, a significant portion of the hearing also addressed non-crypto matters, including the looming threat of a government shutdown and worries regarding the SEC’s emphasis on climate-related issues.

Chairman McHenry Criticizes SEC’s Approach

Chairman Patrick McHenry criticized the SEC’s recent court losses and accused the agency of aggressively pursuing the digital assets ecosystem. He contended that this strategy was leading to confusion and long-term harm to the industry. In response, Gensler reiterated that Bitcoin is not classified as a security.

Adding to the ambiguity surrounding the SEC’s activities, Gensler suggested that a government shutdown anticipated for next week could significantly affect the agency’s operations. He expressed concern that staffing could be reduced by over 90%, leaving only senior leadership to function. This situation could result in delays in the routine review and approval of SEC filings.

During the hearing, Rep. Stephen Lynch also inquired about the SEC’s ongoing legal battle with Ripple, where a judge determined that the company had not breached federal securities law in selling XRP to retail investors. Gensler opted not to comment on the issue, citing its current status in court.

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