Gensler Won’t Ban Crypto But The US Congress Could: Report

Gensler won’t ban crypto but the US congress has that power as the SEC doesn’t have the authority to ban cryptocurrency. In today’s cryptocurrency news, we learn more about the power these regulators have.

The head of the US Securities and Exchange Commission confirmed that the agency doesn’t really have the authority or intention to ban crypto and while responding to the questions during a House Committee on Financial Services hearing, Gensler outlined that prohibiting crypto doesn’t fall under the SEC mandate but it does fall under the Congress’:

“It’s a matter of how we get this field within the investor consumer protection that we have and also working with bank regulators and others — how do we ensure that the Treasury department has it within anti-money laundering, tax compliance. Many of these tokens do meet the test of being an investment contract, or a note, or security, within the investor protection remit of the SEC.”

Gensler noted that the financial stability issues that these stablecoins could raise are a priority of the agency. Representative Patric McHenry took aim at the actions and the stance was taken by the SEC regarding the digital assets sunder Gensler’s leadership and accused the head of the SEC of failing to act in accordance with the long-held practice of noticing comment on rulemaking and the procedures. He noted:

“Some of those comments you have made have raised questions in the marketplace and made things less than clear. You’ve made seemingly off-the-cuff remarks that move markets, you’ve disregarded rule-making by putting a statement out without due process, and you’ve essentially run roughshod over American investors.”

Gensler did say that the SEC follows the administrative procedures act. McHenry on the other hand cited comments made by Gensler to the US Congress Committee in 2019 while teaching at MIT where he criticized past rulings from the SEC classifying BTC and ETH as commodities. When he was asked about his views on the matter, Gensler said:

 “I’m not going to get into any one token, but I think the securities laws are quite clear — if you’re raising money […] and the investing public […] have a reasonable expectation of profits based on the efforts of others, that fits within the securities law.”

While Gensler won’t ban crypto, McHenry proposed the Clarity for Digital Tokens Act of 2021 that draws a safe harbor proposal put forward by the crypto-supporter Hester Peirce. During the hearing, McHenry pressed Gensler whether he took the time to review the proposal by Peirce but he evaded the answer smoothly:

“Commissioner Peirce and I have talked on her thoughts around a potential safe harbor. I think that the challenge for the American public is that if we don’t oversee this and bring in investor protection, people are going to get hurt.”