Today, the Senate Banking Committee held its first hearing on the nomination of Gary Gensler to chair the Securities and Exchange Commission. The role will have major influence on the future of crypto regulation, as the SEC has been a chokepoint for major areas like the status of initial coin offerings, approval of new exchange-traded funds, and crypto firms going public.
In his appearance before the committee, however, Gensler was evasive about any specific changes he would make to the SEC's crypto policy. He supported prior decisions, like Bitcoin’s (BTC) exclusion from the SEC’s purview, but dodged any real commitment to any changed ICO policy.
“Bitcoin and other cryptocurrencies have brought new thinking to financial planning and investor inclusion,” said Gensler. “I’d work with fellow commissions both to promote the new innovation but also, at the core, ensure investor protection. If something were a security, for instance, it comes under security regulation, under the SEC.”
In logical terms, promising treating securities as securities is pretty tautological. The determination of which crypto assets qualify as securities and, specifically, investment contracts has largely depended on isolated or oblique commentary from SEC staff over the years.
The SEC has also released a trio of no-action letters that have been subject to extensive analysis from the crypto world. The agency has also engaged in several enforcement actions that have, depending on your perspective, tamed or ravaged the ICO market.
Sen. Cynthia Lummis, a known advocate for cryptocurrency, noted that the SEC has “a reputation as a black hole for innovators,” especially when it comes to digital assets. “I do think that technology markets constantly change and evolve and it’s important for the SEC to provide clarity,” adding, “It’s important to provide that whether through guidance or no-action letters.”
Despite Gensler’s fairly noncommittal statements in today’s hearing, the crypto industry has high hopes for his role, especially given his work teaching courses on blockchain at the Massachusetts Institute of Technology in recent years.
The members of the Banking Committee broadly showed bipartisan support for Gensler's nomination. Several of the Republicans on the committee took the opportunity to oppose plans to expanded requirements for public companies to disclose environmental impact, which Gensler supports, but there's little reason to believe that net resistance is enough to stop Gensler's confirmation to become the chairman of the SEC.