U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler testified at a Congressional hearing on the agency’s oversight before the Senate Committee on Banking, Housing, and Urban Affairs. Gensler said that crypto has significant non-compliance and that the industry is rife with fraud, abuse, and misconduct.
Crypto Misconduct Daunting
In response to a question on the US SEC’s strength in terms of having enough staff for enforcing regulation on the crypto ecosystem, Gensler said the agency is far from being overstaffed. United States Senator Catherine Cortez Masto had asked whether the agency was understaffed particularly on the enforcement side. Gensler stated that the agency is only 3% larger in terms of staff count compared to 7 years ago.
“The markets have grown 50-60% in terms of activity and complexity.” He added that in terms of crypto, the SEC Chair said,
“I have been around finance 44 years now and I have never seen a field (crypto) that’s rife with more misconduct. It’s daunting.”
In October 2022, CoinGape reported that the SEC staff lacks knowledge required to draft rules for the crypto market. It was revealed that over 20% of the senior attorneys and officials, likely as a result of Gensler’s failure as the Chair. Besides, there was speculation around an internal rift within the agency around rulemaking on the digital assets.
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SEC Chair Takes Caution
In his initial remarks, the SEC Chair gave a disclaimer that his comments during the hearing are not representative of the agency or its staff. This is in continuation to the recent practice Gensler began in context of the SEC receiving criticism over his comments against the crypto market. Importantly, the SEC Chair had in his pre-hearing testimony attempted to avoid questions around the agency’s recent setbacks including in the XRP and Grayscale lawsuits.
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No Comment On Ongoing Crypto Lawsuits
In an interesting turn of events before the hearing, Gary Gensler had mentioned in his testimony that he would not be able to comment on any active and ongoing litigation. The SEC Chair stated,
“While I’m happy to discuss the SEC’s work, I will not be able to comment on any active, ongoing litigation.”
In this respect, Gensler had indirectly denied a comment on the some of the most important lawsuits in the crypto market, like the one on Grayscale‘s application for a Bitcoin ETF and the XRP lawsuit. In the recent judgments in both of the lawsuits, the US SEC faced defeat with the Summary Judgment in the XRP lawsuit going Ripple’s way and the judge who ruled in the Grayscale Vs SEC lawsuit granting the company’s motion to approve conversion of its Grayscale Bitcoin Trust into a spot Bitcoin ETF.
Earlier, CoinGape reported that crypto exchange Coinbase called for having a legislative approach to create crypto regulation to ensure consumer protection. The US based exchange argued that the regulatory uncertainty of the enforcement only approach puts 4 million jobs at risk by 2030.
Meanwhile, in reaction to the Gary Gensler hearing, the Bitcoin price did not show much deviation although the cryptocurrency continues to retain 24 hour gains. It remains to be seen if further grilling of the SEC Chair on crypto would have any impact.
Grayscale ETF Decision In Pipeline
Replying to Senator Bill Hagerty about the recent Grayscale ruling, the Commission’s Chair explained that the agency is still reviewing the Court’s decision. He added that the SEC has multiple filings under review, in an apparent indication that all the spot ETF applications are being looked at as one. Gensler added that he was looking forward to the recommendations of the SEC’s staff. The Grayscale ruling had effectively raised hopes of the spot Bitcoin ETF approval in the US.
In a recent statement, Grayscale asserted that the Commission should consider approving all the spot Bitcoin ETF applications at once. Companies like Blackrock, Fidelity, WisdomTree, Invesco, Ark Invest and Bitwise are all vying for the approval of the first ever spot ETF in United States. Also, the list of competitors continues to grow with the addition of investment manager Franklin Templeton in the ETF race.
Between Blackrock, Fidelity, Invesco, and now Franklin Templeton — the combined AUM of firms that have filed for Bitcoin spot ETFs is now over $16 trillion.
— Will Clemente (@WClementeIII) September 12, 2023
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Source: https://coingape.com/gary-gensler-in-us-senate-hearing-crypto-is-rife-with-fraud/
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