April 20, 2023: Securities and Exchange Commission Chairman Gary Gensler expresses a barrage of criticism from House Republicans more than his agency’s crackdown on cryptocurrency trading platforms on Tuesday.
In over four hours of testimony before the House Financial Services Committee, Gensler stood company on his view that crypto trading sites and exchanges abide by strict U.S. securities laws.
“All of these firms should comply with the law, and until happening, we will continue to get them as the cop on the beat and investigate and be following the facts and law,” Gensler stated to the panel.
Republicans increased many of the crypto industry’s points regarding regulation, arguing that the SEC’s disclosure rules were designed to regulate traditional markets and are ill-suited to decentralize digital currency exchanges.
Without legislation from Congress that creates a recent regulatory framework for crypto, the firm argue, digital platforms will move overseas, avoiding running afoul of U.S. regulators.
This could cut America’s status as a hub for cryptocurrency innovation and potentially cede that position to U.S. adversaries.
“Your approach is driving creation overseas and which endangers American competitiveness,” committee chairman Rep. Patrick McHenry, R-N.C., stated Gensler at the beginning of the hearing.
“Regulation by enforcement is not enough nor sustainable,” said McHenry.
“You’re blaming a digital asset company for allegedly not adhering to the law when they are unware it will permit them.”
However, Gensler denies that crypto trading platforms don’t know how to indentifying U.S. securities laws.
“We have a complete field in crypto that comprehends the law, and if they are given exchange services, broker-dealer services, which clears services of crypto security passes, they should come into compliance,” Gensler said to a similar point later in the hearing.
Throughout his testimony, Gensler refused to discuss the specifics of its investigation regarding the collapse of FTX and its notice to Coinbase in the previous month that the crypto exchange was under investigation.