Congressmen expose SEC internal divide, accuse Gensler of bowing to Warren’s ‘anti-crypto’ army

Mila September 24, 2024

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Key Takeaways

SEC Chairman Gary Gensler accused of politicizing agency to favor anti-crypto policies.
Rep. Davidson criticizes SEC’s unclear “Hotel California style” crypto regulations.

Today, in a heated hearing before the House Financial Services Committee, several Congressmen openly accused SEC Chairman Gary Gensler of steering the agency’s agenda based on political motives, particularly influenced by what has been dubbed Senator Elizabeth Warren’s “anti-crypto army.”

Rep. Warren Davidson set the tone early, accusing Gensler of politicizing the commission and highlighting what he termed “seven failures” of leadership.

Among these, Davidson criticized the SEC’s “Hotel California style rules for crypto, where, you know, they all have the ability or direction to come check in anytime you like, but never with the authority to leave with some approval or clarity.”

In a particularly tense exchange, Davidson questioned Gensler about potential coordination with other agencies to restrict market access for crypto-affiliated firms. ”

Do you guys discuss things like Operation Choke Point 2.0, the way to block and restrict market certainty for crypto affiliated firms?” Davidson asked.

Gensler responded, “I’ve never heard that term,” denying any knowledge of such coordinated efforts.

The internal divide within the SEC became evident when Commissioner Hester Peirce, known as “Crypto Mom” for her pro-innovation stance, was asked about the agency’s priorities.

“The agenda is the chairman’s agenda,” Peirce stated, suggesting a lack of collaboration among commissioners.

Rep. Tom Emmer accused Gensler of expecting political allegiance from both appointees and civil servants.

“We could not have had a more historically destructive or lawless chairman of the SEC,” Emmer declared, pointing to what he saw as inconsistencies in the SEC’s approach to crypto regulation.

Emmer also raised concerns about the influence of what some have dubbed the “Elizabeth Warren crypto Army,” suggesting that Gensler’s actions align closely with the senator’s known anti-crypto stance.

“You’ve baited companies eager to comply with you, only to hit them with enforcement actions,” Emmer charged, accusing Gensler of retaliating against businesses that have testified before the committee.

Critics argue that the agency has relied too heavily on enforcement actions rather than providing clear guidelines, creating what some describe as “regulation by enforcement.”

Gensler defended his record, stating, “We are enforcing the laws, and there are many.”