Gensler was criticized by Congressman Tom Emmer, who said that his regulation strategy favored major financial firms and was detrimental to innovation.
SEC Chair Gary Gensler was at a congressional testimony on Wednesday, declining to answer the most urgent questions about the crypto industry.
SEC Chair says the agency is still considering ETF applications
On Wednesday before the House Financial Services Committee, Gensler maintained his stance on crypto, doubling down that funds are commingled in crypto.
Congressman Rep. Warren Davidson, renowned for his support of Bitcoin and the larger cryptocurrency community, questioned the SEC Chair at the hearing if he respected the judiciary’s authority in matters relating to the Bitcoin ETF.
Gensler said that the agency hasn’t decided on what to do following the court judgement that sent the SEC back to the drawing board concerning spot Bitcoin ETF applications pending on its table.
“It’s still an active consideration of the commission,” Gensler said in his testimony. “We have great respect for the courts.”
In August, a judge on the D.C. Circuit Court of Appeals urged the SEC to reconsider its position on these requests for Bitcoin ETFs. According to a ruling by Circuit Judge Neomi Rao, the agency’s denial in the Grayscale Investments case was “arbitrary and capricious.” Gensler’s testimony was vague on the agency’s future plans and timing.
Amidst the uncertainty, four congressmen have urged the markets regulator to hasten its timeline for the approval of the anticipated investment vehicle.
Read more: Gary Gensler at the Capitol: In 44 years, I have never seen misconduct as rife as in crypto
Bitcoin not security: Crusade of losing streak
Rep. Patrick MCHenry, the panel’s chairman, noted that the regulator has been on a losing streak in the courts. The Congressman said that Gensler’s crusade against the digital assets ecosystem has been in shambles and may cause “lasting damage” on the industry.
During the questioning, he elicited response from the SEC Chief concerning his stance on Bitcoin not being a security. Gensler maintained that Bitcoin didn’t mean the Howey test.
“It does not meet the Howey test, which is the law of the land,” Gensler said.
However when asked by the Rep if Bitcoin must be a commodity, the chief regulator said that the test for that was outside the scope of the US Securities law.
Pokemon card may be security
Rep. Ritchie Torres questioned Gensler on tokenized Pokemon card, whether tokenizing will make the card a security.
Rep. Torres: If I were to purchase a tokenized Pokemon card on a digital exchange via a blockchain, is that a security transaction?
Gensler: I’d have to know more.
He then further explained that the card would be a security when the investing public can anticipate profits based on the efforts of others.
Rep. Torres concluded that Gensler was being evasive and incoherent.
“Chair Gensler’s answers to my questions were as incoherent as his overall approach to regulating crypto,” Torres said. “The manipulation of securities law that has become his modus operandi is an open invitation to arbitrary enforcement.”
Pokémon cards are never securities, according to Torres, and tokenizing them or putting them on the blockchain doesn’t make them become securities overnight.
Gensler’s position on digital assets has been contested previously. Gensler was criticized by Congressman Tom Emmer, who said that his regulation strategy favored major financial firms and was detrimental to innovation.
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