- In an extraordinary session before Congress, all five voting members of the U.S. Securities and Exchange Commission (SEC) engaged in a heated debate regarding crypto regulation.
- Chairman Gary Gensler faced intense scrutiny over the SEC’s approach to cryptocurrency oversight, including allegations of a clandestine “Operation Choke Point 2.0.”
- Commissioner Hester Peirce and other SEC members publicly criticized Gensler’s regulatory policies, highlighting a significant divide within the agency.
SEC’s crypto regulation policies come under intense scrutiny in a rare congressional session, with members clashing over the agency’s approach to digital assets.
Gensler Denies Knowledge of “Operation Choke Point 2.0”
During the congressional hearing, Chairman Gensler denied any familiarity with “Operation Choke Point 2.0,” a term referring to a supposed coordinated effort to stifle the development of the American crypto industry. Rep. Warren Davidson (R-OH) posed direct questions to Gensler, inquiring whether he had ever discussed this theory with the Chair of the Federal Reserve. Gensler’s response was succinct: “I’ve never heard that term,” he said with a smile.
Harsh Critiques from Lawmakers
The four-hour hearing was marked by sharp criticism from lawmakers, particularly from the Republican side. Rep. Tom Emmer (R-MN), a vocal advocate for cryptocurrency, chastised Gensler’s tenure as SEC Chair, labeling it historically destructive and lawless. Emmer’s rebukes were intensified during a heated exchange where he frequently interrupted Gensler’s responses, underscoring the tension in the room.
Internal SEC Divisions Come to Light
In an unprecedented display, several SEC commissioners voiced their dissent regarding Gensler’s crypto policies, even as they sat mere feet away from him. Commissioner Hester Peirce was particularly vocal, criticizing the agency’s inconsistent stance on whether certain crypto tokens qualify as securities. Peirce, appointed by Republicans, often finds herself at odds with her Democratic colleagues but rarely had the platform to challenge Gensler so directly and publicly.
SEC’s Terminology Under Scrutiny
One of the session’s focal points was the SEC’s terminology, specifically the use of “crypto asset securities.” The term, admitted by the SEC in a recent lawsuit, may misleadingly suggest that certain tokens are inherently securities. Peirce acknowledged that this terminology might have caused confusion and argued that the agency should have been more transparent about the nature of crypto tokens. “That’s something that we should have admitted long ago,” she remarked in response to a query from Committee Chair Rep. Patrick McHenry (R-NC).
Gensler’s Policy Agenda Faces Criticism
Commissioner Peirce laid the responsibility for the SEC’s contentious crypto agenda squarely on Chairman Gensler. When probed about the source of the SEC’s perceived adversarial stance towards cryptocurrencies, Peirce’s response was unambiguous: “The agenda is the Chairman’s agenda.” This statement underscores the internal discord within the SEC and suggests that Gensler’s leadership is a central point of contention.
Conclusion
The congressional hearing exposed deep rifts within the SEC over its cryptocurrency policies, with Chairman Gensler at the center of the controversy. Lawmakers and commissioners alike challenged Gensler’s approach, calling for greater clarity and transparency in the SEC’s regulatory framework. Moving forward, the debate over crypto regulation is likely to intensify, with significant implications for the future of the digital asset industry in the United States.
