On April 30, House Financial Services Committee Chair Patrick McHenry asserted on X that United States Securities and Exchange Commission (SEC) Chair Gary Gensler had “knowingly misled Congress when pressed on the classification” of Ethereum (ETH) during his testimony to the Financial Services Committee last April.
McHenry’s claim emerged shortly after unredacted court documents filed by Consensys Software Inc. in its case against the SEC disclosed that Gensler and the federal agency seemed to have considered ETH a security for slightly over a year.
Patrick McHenry Blasts Gary Gensler Over ETH As A Security Testimony
The Consensys filing revealed that on March 28 of the previous year, the SEC Director of Enforcement, Gurbir S. Grewal, initiated an investigation into the “possible offers and sales, since at least 2018, of ‘certain securities, including, but not limited to ETH.’”
On April 18, 2023, Gensler avoided directly addressing whether ETH could be deemed a security while evading inquiries from U.S. lawmakers.
McHenry commented, “New court filings demonstrate this was a deliberate effort to misrepresent the Commission’s stance. Classifying Ether as a security contradicts previous statements of the SEC and Chair Gensler – yet another instance of the arbitrary and inconsistent nature of the agency’s enforcement-focused approach to digital assets.”
Numerous members of the crypto community responded to McHenry on X, expressing frustration over the lack of congressional action regarding the SEC’s management of cryptocurrency regulation.
“Great job! I’m sure Gensler is worried, knowing that another strongly worded letter might be on its way,” one user remarked.
“Talk, talk, talk. When will Gary be held responsible for my (our) losses?” another user questioned.
The SEC Faces Criticism Amid Push For FIT21
The SEC has faced ongoing criticism for its stringent regulatory stance on cryptocurrency. Earlier this month, the commission issued a Wells notice to Consensys, cautioning the ETH developer of an impending enforcement action.
In response, Consensys has filed its own lawsuit, alleging regulatory overreach by the SEC.
“The U.S. Securities and Exchange Commission (the ‘SEC’ or the ‘Commission’) seeks to classify ETH as a security, despite ETH lacking any of the characteristics of a security — and despite the SEC previously stating that ETH is not a security and falls outside its statutory jurisdiction,” the lawsuit asserted.
McHenry leveraged his condemnation of Gensler to further advocate for the Financial Innovation for Technology for the 21st Century Act (FIT21), introduced by House Republicans last summer.
If passed, FIT21 would establish a regulatory framework for participants in the crypto industry, potentially deterring further enforcement actions by the SEC.
