During his congressional testimony on Wednesday, Gary Gensler, the U.S. Securities and Exchange Commission (SEC) chairman, persisted in his criticism of the cryptocurrency industry.
Despite partisan divisions and ongoing legal battles, Gensler did not disclose the SEC’s next moves regarding spot bitcoin exchange-traded funds (ETFs) following a recent legal setback.
Gensler Accuses Crypto Companies
Chair Gary Gensler continued his combative stance against what he called crypto “hucksters.” During his remarks before the House Financial Services Committee, Gensler accused digital assets companies of being reckless with customer assets, particularly in the commingling of funds, which he described as a recipe for disaster.
Gensler also touched on the recent court ruling that sent the SEC back to reconsider its stance on spot Bitcoin ETFs. In August, a D.C. Circuit Court of Appeals judge urged the SEC to reevaluate its decision in the Grayscale Investments case, stating that the agency’s rejection had been “arbitrary and capricious.”
However, Gensler’s testimony left the industry in suspense, with no clear indication of the SEC’s next move or the timeline for its decision.
While the crypto industry remained a central topic of discussion, much of the hearing also revolved around non-crypto issues, including the upcoming threat of a government shutdown and concerns over the SEC’s focus on climate-related matters.
Chairman McHenry Criticizes SEC’s Approach
Chairman Patrick McHenry also criticized the SEC’s losing streak in court and accused the agency of aggressively targeting the digital assets ecosystem. He argued that this approach was causing confusion and long-term damage to the industry. In response, Gensler emphasized that Bitcoin is not considered a security.
Adding to the uncertainty surrounding the SEC’s operations, Gensler hinted at the potential impact of a government shutdown scheduled for next week. He expressed concern that the agency’s staffing could be reduced by more than 90%, with only senior leadership remaining operational. This led to delays in day-to-day reviews and approvals of SEC filings.
During the hearing, Rep. Stephen Lynch also questioned Gensler about the SEC’s ongoing legal dispute with Ripple, where a judge ruled that the company had not violated federal securities law in selling XRP to retail investors. Gensler declined to comment on the matter, citing its ongoing status before the court.
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