U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler testified at a Congressional hearing on the agency’s oversight before the Senate Committee on Banking, Housing, and Urban Affairs. Gensler said that crypto has significant non-compliance and that the industry is rife with fraud, abuse, and misconduct.
In response to a question on the US SEC’s strength in terms of having enough staff for enforcing regulation on the crypto ecosystem, Gensler said the agency is far from being overstaffed. United States Senator Catherine Cortez Masto had asked whether the agency was understaffed particularly on the enforcement side. Gensler stated that the agency is only 3% larger in terms of staff count compared to 7 years ago.
SEC staff lacks the knowledge required to draft rules for the crypto market. It was revealed that over 20% of the senior attorneys and officials, likely as a result of Gensler’s failure as the Chair. Besides, there was speculation about an internal rift within the agency around rulemaking on digital assets.
In his initial remarks, the SEC Chair gave a disclaimer that his comments during the hearing were not representative of the agency or its staff. This is in continuation to the recent practice Gensler began in the context of the SEC receiving criticism over his comments against the crypto market.
Gensler had indirectly denied comment on some of the most important lawsuits in the crypto market, like the one on Grayscale’s application for a Bitcoin ETF and the XRP lawsuit. In the recent judgments in both of the lawsuits, the US SEC faced defeat with the Summary Judgment in the XRP lawsuit going Ripple’s way and the judge who ruled in the Grayscale vs. SEC lawsuit granting the company’s motion to approve the conversion of its Grayscale Bitcoin Trust into a spot Bitcoin ETF.
Meanwhile, in reaction to the Gary Gensler hearing, the Bitcoin price did not show much deviation although the cryptocurrency continues to retain 24-hour gains. It remains to be seen if further grilling of the SEC Chair on crypto would have any impact.
In a recent statement, Grayscale asserted that the Commission should consider approving all the spot Bitcoin ETF applications at once. Companies like Blackrock, Fidelity, WisdomTree, Invesco, Ark Invest, and Bitwise are all vying for the approval of the first-ever spot ETF in the United States. Also, the list of competitors continues to grow with the addition of investment manager Franklin Templeton in the ETF race.