The SEC and its Chair, Gary Gensler, have hogged the spotlight again after House Financial Services Committee Chairman Patrick McHenry came forward with serious allegations. This comes after recent controversies surrounding the US regulator, including a federal judge rebuking the regulator for “gross abuse” of power. Adding fuel to the fire were the unredacted filings from Ethereum firm ConsenSys, revealing that Gensler believed ETH was a security for at least a year.
However, McHenry highlighted more shocking revelations, stating that evidence showed Chair Gensler intentionally misled both Congress and the public during a testimony last April. Citing new court filings, Gensler evaded clear answers about Ethereum’s classification as a security, a move McHenry now claims was a deliberate obscuring of the regulator’s position.
This episode underscores the urgency of Congress passing the bipartisan FIT for the 21st Century Act to provide a clear regulatory framework and robust consumer protections for digital asset markets. Committee Republicans will continue to hold Gary Gensler’s SEC accountable for its regulatory overreach that is stifling innovation, leaving American consumers unprotected, and risking our national security.
McHenry argues that the contradiction between Gensler’s previous assertions and the SEC’s longstanding views not only raised doubts over the regulatory body’s consistency and transparency but exemplifies the “arbitrary and capricious” nature of the regulator’s stance to digital asset regulation—an approach that increasingly appears as regulation by enforcement rather than by clear rules.
ConsenSys Confronts SEC in Court
In response to what he describes as a regulatory overreach that threatens innovation while leaving American consumers unprotected, McHenry emphasizes the necessity for legislative action. He advocates for the swift passage of the bipartisan FIT for the 21st Century Act, which aims to establish a definitive regulatory framework and enhance consumer protections in the digital asset markets.
Earlier, Ethereum firm Consensys filed a lawsuit against the SEC. Following a Wells notice, the blockchain company challenged the regulator’s approach, arguing that its ad hoc enforcement actions were an overreach of its power. A Wells notice is seen as a formal indication that the agency might sue them for not complying with the required laws.