Gary Gensler-led SEC moved forward with cryptocurrency enforcement ‘despite legal challenges,’ commissioner admits at hearing

SEC Commissioner Hester Pierce admitted Tuesday that the agency had taken regulatory action against crypto entities while being aware of potential legal issues.

What happened“We knew in advance that there were legal questions about whether we had the authority to do what we did, but we moved forward,” she said during the House Financial Services Committee hearing Tuesday.

She added that this approach was detrimental to the SEC’s institutional integrity, highlighting the agency’s difficulties in navigating the regulatory landscape of digital assets.

representative Tom Emmer SEC Chairman Under Heavy Questioning Gary Gensleraccusing him of waging an illegal campaign against the cryptocurrency industry. “You abused the agency’s enforcement tools and even lured companies willing to comply, only to then hit them with enforcement actions,” Emmer said during the hearing.

Also read: Caitlin Long says ‘progressives are actually big bank corporatists’ as Republican lawmakers urge SEC to repeal cryptocurrency accounting rule

Why it matters:Gensler, who has been at the center of the SEC’s efforts to regulate cryptocurrencies, defended the agency’s actions, pointing to court decisions that have upheld the clarity of the Howey test, used to determine what constitutes a security.

“Numerous courts have held that Howey provides clearly expressed tests for determining what constitutes an investment contract,” Gensler said.

He also acknowledged the risks inherent in the cryptocurrency sector, including cybersecurity concerns, particularly with exchange-traded funds (ETFs), saying: “Concentration could be a risk, and that’s why competition is also good.”

Emmer did not hold back in criticizing the SEC, accusing it of confusing the market and lacking transparency. “You invented the term ‘cryptoasset’ – it’s not in the law anywhere. You used that term as the basis of your entire crusade to enforce the law, but your lawyers retracted it in court,” Emmer said, pointing out the inconsistencies in the SEC’s approach to regulation.

“Your inconsistencies on this issue, sir, have set this country back. We could not have had a more destructive, lawless SEC chairman,” Emmer said.

And then: These ongoing debates and regulatory developments will be at the heart of Benzinga’s “Future of Digital Assets” event on November 19.

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