SEC Chair Gary Gensler faced intense criticism from both lawmakers and members of his own agency during a House Financial Services Committee hearing, specifically regarding his approach to crypto regulation in the U.S.
U.S. Representative Tom Emmer was particularly vocal, accusing Gensler of being the most “destructive” and “lawless” chair in the SEC’s 90-year history. Emmer criticized Gensler for coining the term “crypto asset security,” which, according to Emmer, has no basis in law or statute. He further accused Gensler of failing to provide clear guidelines on how the SEC defines this term.
“You made it up,” Emmer told Gensler during the September 24 hearing, adding that this term had been the foundation for Gensler’s “enforcement crusade” against the crypto industry over the past three years—until SEC lawyers retracted the term last week in a court filing.
Emmer went on to say, “Your inconsistencies on this issue have set this country back. We could not have had a more historically destructive or lawless chairman of the SEC.” He also criticized the SEC’s handling of the Debt Box case, in which the agency accused a crypto startup of a $50 million fraud, only for the case to be dismissed. The SEC was ordered to pay $1.8 million in legal fees, and Emmer accused SEC attorneys of fabricating details to further Gensler’s “anti-crypto rhetoric.”
Gensler acknowledged that the matter was mishandled but offered little in response.
The SEC chair also faced criticism from within the agency. SEC Commissioner Hester Peirce expressed her discontent over the recent withdrawal of the term “crypto asset security” in court, saying the admission that tokens are not securities “should have happened long ago.” Peirce emphasized that the agency had failed in its regulatory duty to provide clarity.
On the question of whether Congress should provide a statutory definition for crypto tokens, Peirce said that while legislative action would be helpful, the SEC could have provided its own guidelines but chose not to.
Gensler also confirmed that the SEC’s controversial Staff Accounting Bulletin No. 121 (SAB 121), which requires entities holding crypto to record them as liabilities, would remain in place despite calls for its repeal. He defended the bulletin, citing the need for public companies to understand the risks involved in holding crypto, particularly in light of high-profile collapses like FTX and Terraform Labs.
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