FameEX Hot Topics | US Legislator Criticizes SEC for Cryptocurrency Regulation Opacity, Questions Chair Gensler's Personal Motives

U.S. Congressman Tom Emmer, House Majority Whip and a Republican from Minnesota, criticized the Securities and Exchange Commission (SEC) for its lack of clarity in crypto regulations and raised questions about SEC Chair Gary Gensler's personal motives. Emmer made these remarks during a hearing of the House Subcommittee on Digital Assets, Financial Technology, and Inclusion, titled "Fostering Financial Innovation: How Agencies Can Leverage Technology to Shape the Future of Financial Services."

Emmer expressed his concerns on social media, stating, "The SEC has a deliberate policy preference to provide LESS clarity to the marketplace instead of more clarity. Complete disservice to our great capital markets." During the hearing, Emmer referenced a speech titled "Digital Asset Transactions: When Howey Met Gary," which was given by William Hinman in June 2018 when he served as the director of the Division of Corporation Finance at the SEC. In the speech, Hinman discussed how tokens can transition from being considered securities to non-securities and explicitly stated that ether (ETH) is not a security.

Emmer pointed out that Valerie A. Szczepanik, the director of the SEC's Strategic Hub for Innovation and Financial Technology (Finhub), had reviewed Hinman's draft speech and stated that providing "less detail in a speech is better because the concept of a token morphing from a security to a non-security was a new concept and would generate a lot of discussions." Emmer questioned Szczepanik during the hearing about whether Finhub had issued any guidance on how security laws apply to crypto since Chair Gensler took office. Szczepanik did not provide a clear answer, and Emmer implied that the SEC was resorting to rulemaking through enforcement actions instead of providing clear guidance.

Emmer also asked Szczepanik if she still believed that ether is not a security, as Hinman had stated in his 2018 speech. Szczepanik declined to comment, citing an inability to discuss specific assets due to pending litigation. Emmer concluded his remarks by suggesting that the SEC was not adhering to the law and that the commission's approach had resulted in multiple legal defeats. He also raised concerns about whether Chair Gensler's positions were motivated by personal goals rather than a commitment to the law.