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SEC Oversight Hearing: SEC Chairman Grilled by Republicans on Senate Banking Committee

Crowdfund Insider | | Sep 15, 2021

Gary Gensler   - SEC Oversight Hearing:  SEC Chairman Grilled by Republicans on Senate Banking CommitteeSEC Chairman Gary Gensler marched up to Capitol Hill yesterday to testify in front of the Senate Banking Committee in a hearing entitled “Oversight of the U.S. Securities and Exchange Commission”.  Gensler outlined his ambitions at the SEC in his prepared remarks.

While Gensler received relatively light questions from Democrat Committee members, Republicans took the opportunity to challenge the top securities regulator on several important policy issues.

Senator Sherrod Brown, Chairman of the Committee, focused his introductory comments on a financial system that has “catered to the big guys,” emphasizing the need for greater regulation while lambasting the actions of the last administration.

See:  Top US regulator tells crypto exchanges they need to ‘come in and talk to us’

Ranking Member Senator Pat Toomey said there are numerous areas where they would agree but hammered Gensler’s statements on payment for order flow as the SEC has not “demonstrated any failure or harm associated with payment for order flow, which the SEC has allowed for years.”

Regarding cryptocurrency, an area that the SEC has struggled to regulate and craft bright-line rules, Toomey criticized Gensler once again for the Commission’s vague approach, a posture that has been bemoaned by industry participants.

“Based on your public statements, you believe that some are securities but others are not. So, I am frustrated by the lack of helpful SEC public guidance explaining how you make this distinction. What makes some of them securities and others not?” Toomey asked.  “Why wait to make the SEC’s views known only when it swoops in with an enforcement action, in some cases years after the product was launched?”

While noting that the SEC is in the habit of providing private guidance to potential digital asset issuers and crypto firms, Toomey asked why Gensler and the SEC does not simply let their views be known and provide transparency to the emerging sector of Fintetch.

Regulation by enforcement will crush domestic innovation and, perhaps, compel Fintech innovators to move elsewhere. While supporting regulation when necessary, Toomey requested clarity from the SEC asking Gensler to publicly announce what characteristics make a crypto a security or not, asking the Chairman “why wait?”

Read:  Decentralized Finance—Risks, Regulation, and the Road Ahead

During questioning, Gensler said that most cryptocurrencies are securities as they are investment contracts. Toomey asked if stablecoins are securities while stating he believes they are not. Gensler said he believes that stablecoins may be securities putting the entire sector in question.

Gensler said that current law has established a very broad definition of a security and “Congress can change that.”

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NCFA Jan 2018 resize - SEC Oversight Hearing:  SEC Chairman Grilled by Republicans on Senate Banking Committee The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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