During a recent congressional hearing, Securities and Exchange Commission Chair Gary Gensler faced a barrage of criticism and colorful analogies from lawmakers. U.S. Representative Andy Barr accused Gensler of “kneecapping” U.S. capital markets with excessive regulations, likening him to the infamous figure skater Tonya Harding, who hired an assailant to attack her rival. Barr’s comment referenced Gensler’s previous statement that the U.S. capital markets should not be taken for granted.
Representative Warren Davidson expressed his hope that the Biden administration would fire Gensler, accusing him of promoting a “woke” political and social agenda and abusing his position at the SEC. Davidson introduced the SEC Stabilization Act and suggested that Gensler’s actions were making a case for its implementation.
During the hearing, Gensler reiterated that Bitcoin is not a security, stating that it does not meet the Howey test, a legal criterion used to determine whether an asset qualifies as a security. Gensler declined to provide a definitive answer when asked whether Bitcoin is a commodity, citing the scope of U.S. securities laws. Representative Patrick McHenry also accused Gensler of obstructing the digital asset ecosystem and lacking transparency regarding the SEC’s connections with FTX and its former CEO, Sam Bankman-Fried.
Representative Ritchie Torres questioned Gensler about the definition of an investment contract, using Pokemon trading cards as an example. Gensler was unable to provide a clear answer, stating that it would depend on the context. Torres pressed further, asking about tokenized Pokemon cards on a digital exchange via blockchain, to which Gensler replied that he would need more information. He emphasized that the core of the Howey test hinges on the public’s anticipation of profits based on the efforts of others.
Throughout the hearings, eagle-eyed observers noticed a Coinbase “Stand With Crypto” logo behind Gensler, signaling the ongoing efforts of the Coinbase-led initiative to advocate for cryptocurrency legislation in the United States. Coinbase also organized a “Stand with Crypto Day” in Washington, D.C., on September 27 to promote cryptocurrency innovation and policy reform.
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