During a September 24 congressional hearing on the oversight of the US Securities and Exchange Commission (SEC), US lawmakers didn't hold back their criticism of Chair Gary Gensler.
Representative Tom Emmer, a vocal supporter of crypto, described Gensler as the most "destructive" and "lawless" leader in the history of the SEC, saying that inconsistencies in his regulations have pushed the US back.
Emmer took issue with Gensler's creation of the term "crypto asset security." He pointed out that the term has no legal basis and that the SEC has failed to offer clear guidance on its application.
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Emmer argued that Gensler has been using the "crypto asset security" term to fuel aggressive regulatory crackdowns on the industry for the past three years. However, he highlighted that the SEC recently withdrew the term in the footnote of a court case against Binance, which he claimed underscores inconsistencies in the regulator's approach.
The hearing also featured internal SEC tensions, as Commissioner Hester Peirce, known for her pro-crypto stance, stated that the agency should have abandoned the term far earlier. She stated:
We've fallen down on our duty as a regulator not to be precise. Talking into a footnote, that, yes, we admit that now, actually, the token itself is not a security—that's something we should've admitted long ago.
Another topic discussed was the SEC's Staff Accounting Bulletin No. 121 (SAB 121), which requires crypto custodians to record digital assets as liabilities on their balance sheets. Although there has been bipartisan support in Congress to repeal the rule, Gensler defended it when questioned by Representative Wiley Nickel, stating:
It’s a solid accounting bulletin.
Critics like Nickel argue that SAB 121 could put crypto investors at more risk by pushing digital assets out of the hands of regulated banks and into unregulated entities.
The rule remains in effect after President Joe Biden vetoed efforts to repeal it, and a subsequent attempt to override the veto failed to secure the necessary two-thirds majority. However, a group of Republican lawmakers has recently reignited the fight, sending a letter to Gensler urging him to reconsider and reverse the rule.
